Washington: Increasing Foreign Direct Investment in the insurance sector is top priority for the ruling UPA, Finance Minister P Chidambaram said on Saturday, hoping that a bill to address the issue will be passed in the upcoming Parliament session. Responding to questions at the Peterson Institute, Chidambaram appreciated the efforts of the insurance industry in reaching out to the opposition parties and hoped that this would help the political parties understand the issues and thus help in the passage of the bill.
"Parliament opens on April 22. It (Insurance FDI) is right there in top of the agenda. We are stuck on one clause, FDI cap whether it should be 26 or raised to 49. If the principle opposition party comes around, the bill will be passed,"
"I am keeping my fingers crossed. I sincerely hope that the efforts of the insurance industry in speaking to the Opposition will be helpful and I can pass the bill," Chidambaram said.
Noting that without growth there will be neither inclusiveness nor development, he said, "As long as the Congress is at the helm of affairs, I believe that they will accept growth is necessary in order to lead to inclusive development".
"Once you accept that paradigm, you have to accept fiscal deficit, you have to contain inflation, you have to contain expenditure, you have to balance your books to a large extent," Chidambaram said. Responding to questions, Chidambaram said most state governments have now realised that implementation of the programmes is the key.
"Until about 10 years ago, most state governments were not re-elected. If you were in office for five years, you were more or less certain to be defeated in the next election. That seems to have changed in India in the last 10 years," he said.
"Incumbent governments are getting re-elected. The government in the Centre got re-elected in 2009 with a larger number. Since then governments have been re-elected in Gujarat, Madhya Pradesh, Tripura Nagaland, Assam, Mizoram, Meghalaya, and Orissa," he said.
This has vetted the appetite of political leaders and political parties that perhaps defeat is not inevitable, perhaps one can get re-elected for second or third term, Chidambaram added. "If you look at it closely, governments which are seen to have delivered are the governments that are re-elected. I think this fever of implementation seems to have caught on with more and more state governments. This is a very welcome sign," Chidambaram said.
"What we need to do is to find ways and means to get rid of bureaucratic obstacles, policy obstacles to implementation," he said. Meanwhile, after the BRICS Finance Ministers met in Washington on Thursday, Chidambaram said the preparatory work for establishing a BRICS developmental bank would be completed in 12 months so that the final decision on this would be announced by the leaders of Brazil, Russia, India, China and South Africa during their next summit in Brazil.
The Finance Minister of BRICS nations met in Washington on Thursday on the sidelines of the annual Spring meeting of the International Monetary Fund and the World Bank to take the next step towards the establishment of the bank.
"Before we go to Brazil for the next summit, we need to complete our homework. On Friday BRICS finance ministers met in Washington and we reiterated out commitment to the BRICS bank," the Finance Minister said speaking at the institute.
"We have now said that deputies would be meeting and we will engage legal firm, we will draw up the concept paper, flesh out, we will identify the agreement that would have to be signed and all this work will be done in 12 months,"
Questions of where the bank will be located and respective contributions of member countries would be made by the leaders, he added. Noting that this is an ambitious agenda, and an aggressive time table is needed to complete all the preparatory work so that the BRICS leaders can take an appropriate decision in Brazil, Chidambaram exuded confidence to complete the entire process in 12 months.
A BRICS bank, he said, is a great idea. "Before (BRICS Summit in) Durban (South Africa) the finance minister were asked to report weather a BRICS bank was feasible and viable. That was the mandate given to the Finance Ministers," he said.
"The Finance Ministers reported to the leaders in Durban that the BRICS bank is both feasible and viable. So the leaders accepted the report and announced that a BRICS bank would be set up," he said, adding that it was no one's intention to set up a BRICS bank in Durban.