New Delhi: The UPA appears to be unfazed by the opposition to its reforms measures, as the Union Cabinet, in yet another major step, has finally given a go-ahead to introducing foreign direct investment (FDI) in pension and hiking the cap in insurance.
According to sources, the Cabinet cleared as much as 26 per cent FDI in pension and raised the cap in insurance to 49 per cent. 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 and insurance will need Parliamentary ratification as they are governed by an act of law and not an executive domain.
According to sources, the Cabinet cleared 26 per cent FDI in pension and raised the cap in insurance to 49 per cent.
In another major decision, the Cabinet also cleared changes in the Companies Bill, 2011.
The insurance sector welcomed the move to increase FDI cap. "This is a very good move and it will give a boost to the industry," said ICICI Pru Life ED Puneet Nanda.
"This is a very positive move as far as sentiments are concerned," said Future Generali MD and CEO Deepak Sood. Similar comments were echoed by IDBI Federal Life CEO Nageswara Rao who said that the move fulfilled the long standing demand of the industry.
Meanwhile, the Trinamool Congress was quick in attacking the government over the move with party MP Saugata Roy saying they will oppose it in Parliament.
"We need to see what way they bring it in Parliament. There is a certain way to oppose if it is a bill, and there is a certain way to oppose if it is a resolution. We will oppose it," said Roy.
The Left also hit out at the government over the move. CPI leader D Raja called the government "shameless", saying it was "desperate" and "moving towards right wing economic policies".
"We do not have social security network in India, you cannot risk the life long savings of people...we will continue to oppose the move. This is a World Bank-directed move. It is going to be disastrous," said D Raja.
He further said, "The government is desperate. The Prime Minister wants to please international finance capital by taking such measures...the government is shamelessly biased in favour of multinational companies."
The main Opposition party, the Bharatiya Janata Party (BJP) said that the Congress-led UPA had "suddenly changed". The party, however, said that it would wait for the fineprint on the reforms to give a detailed response.
To push the 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.
Even as the Bharatiya Janata Party (BJP) has assured support to the government on pension bill, this could be jeopardised by the government going 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.