The UPA government is likely to take up a slew of big-ticket reform bills in a Cabinet meeting slated tomorrow. Apart from the Companies Bill, the Bills relate to raising the FDI (foreign direct investment) cap in private insurance companies from 26 per cent to 49 per cent, giving statutory powers to the interim pension regulator and more teeth to the forwards market watchdog.
The Cabinet is also expected to discuss the final draft of the 12th Five Year Plan, following which it will be placed before a meeting of the National Development Council later this month. It is also likely to clear the creation of a National Investment Board to be headed by the Prime Minister for clearing mega projects.
Having dithered on an FDI rise in the insurance sector for long, the government has made up its mind to deliberate on the Bill in the Cabinet tomorrow, according to those in the know.
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In fact, the insurance sector regulator, Irda, on Wednesday batted for an increase in the FDI cap to 49 per cent, saying the sector required greater investment for growth.
“Absolutely (I am in favour of 49 per cent). I do think unless we go for 49 per cent we will not have the kind of capital required to underpin the growth of the insurance industry,” Irda Chairman J Hari Narayan said on the sidelines of a CII event here.
“Look at it. In banks it is 74 per cent, in asset management companies, it is 100 per cent... I do not see why in insurance companies it should be 26 per cent. We should increase that,” he said.
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Parliament's standing committee on finance had recommended retaining the FDI cap in the insurance sector at 26 per cent.
As such, it might not be easy for the government to get the Bill passed, at least in the Rajya Sabha where the ruling coalition does not have a majority. Recognising this, Human Resources Development Minister Kapil Sibal recently said the ruling coalition would persuade the Opposition to support the Bill.
The Cabinet will also deliberate on the Pension Fund Regulatory and Development Authority (PFRDA) Bill. It seeks to give statutory power to the interim pension regulator, PFRDA.
To buy peace with the Opposition, the government had earlier agreed to specify the FDI component in the Bill itself. However, the Bill, brought to the Cabinet earlier, said the FDI cap would be 26 per cent or in line with the insurance sector, whichever was higher. The main Opposition, BJP, had earlier agreed to support the Bill, but the UPA’s then ally, Trinamool Congress, had opposed it. The Trinamool Congress had also not allowed deliberations on the Forward Contract (Regulation) Amendment Bill.