New Delhi: The Opposition is already up in arms against more reforms by the UPA government as the Cabinet is expected to clear 26 per cent FDI in pension and raise the cap in insurance to 49 per cent on Thursday. The Bharatiya Janata Party (BJP) is opposed to raising the FDI cap in insurance. The party has no objections with the 26 per cent cap, but is against raising it.
Even as the BJP has assured support to the government on pension bill, this could be jeopardised by the government pushing for 49 per cent FDI in insurance.
The Samajwadi Party, Bahujan Samaj Party and Biju Janata Dal are also opposed to it while the Trinamool Congress and the Left have said that they will defeat the bills in Parliament.
"We will vote against it. We shall oppose it keeping in view the security concerns of the ordinary people. We hope that we will be able to defeat this bill in Parliament," Trinamool Congress leader Saugata Roy said. CPI leader D Raja added, "We will oppose FDI in insurance. What is new about the pension scheme? Why should India succumb to World Bank's policies?"
Meanwhile, sources say the DMK is also opposed to raising FDI in insurance. The DMK is also unlikely to attend the Cabinet meeting on Thursday.
To push these bills, the government needs simple majority in both houses from those members who are present and voting in the house. With Mamata Banerjee's Trinamool Congress gone, the government is dependent on SP and BSP for bailout. At the moment, UPA has 252 seats in the Lok Sabha and is a minority government.
The Cabinet is expected to clear 26 per cent FDI in pensions and 46 per cent in insurance on Thursday. Currently, no foreign investment is allowed in the pension sector and only 26 per cent FDI is allowed in insurance.
The move on FDI in pension will need Parliamentary ratification as insurance is governed by an act of law and is not an executive domain. The Cabinet is also likely to approve the Pharma pricing policy, despite drug experts alleging that there are major loopholes in the pricing of drugs. This reform is expected to make pricing more consumer friendly, but perhaps not in the long run.
The Cabinet will also consider the Forward Contract Regulation Act (Amendment) Bill to empower commodity markets regulator FMC with greater financial autonomy, facilitate the entry of institutional investors and introduce new products for trading such as options and indices. It will also take up the Companies Bill to bring all sectors under the Companies Act, amendment to the Competition Act and a proposal for operationalising the Infrastructure Development Fund (IDF), sources said.
A proposal to set up a National Investment Board (NIB), to be headed by Prime Minister Manmohan Singh, for according fast-track clearances to infrastructure projects will also be taken up at the meeting, they said. The government intends to sent out a strong signal to foreign invetsors and to the domestic constituencies that it is very serious about reforms. But the UPA may not be able to muster numbers to get a legislative backing that is necessary.
This is the second wave of reforms decisions to be undertaken by the government within a month. On September 13, the government had approved the decision of allowing 51 per cent FDI in multi-brand retail, besides relaxing FDI norms for civil aviation and broadcasting sector. The decision on FDI in retail triggered a major uproar, with some allies and opposition parties launching a massive attack on the government. Trinamool Congress even withdrew support to the government. The Cabinet is also expected to approve 12th Plan and accord international status to five airports.