| Veerappa Moily, who has been the Karnataka chief minister and Administrative Reforms Commission chairman, says the government should be in no hurry to raise the FDI cap from 26 to 49 per cent in the insurance sector. |
| According to him, foreign investors will target the "creamy sections" of the Indian society, leaving the social obligation of catering to the weaker sections to domestic companies, which will then be forced to rely on government largesse/subsidies. |
| "The government has to be careful on the issue of FDI in insurance. National perspective is very important in the context of any economic development. There should be a balanced way to look at it (FDI in insurance), and not laissez-faire. FDI cap in insurance sector must not go beyond 49 per cent, but raising it even to that level is not desirable in the immediate time frame," Moily told Business Standard in an interview on Friday. |
| He said the FDI would serve "the elite and creamy section" and will not be interested in the people below that level. "It is high time we should go for weather insurance. Will the FDI get into it? Only our (domestic) insurance companies will get into such areas. What is important at this stage is to ensure widest possible coverage of weaker sections, like those in the handloom and small scale sectors," said Moily, adding that the FDI in this sector would have no social impact. |
| The senior Congress leader conceded that the FDI would bring in more competition in this sector. |
| "But in the name of competition, it will skim away the cream and leave social obligations to our companies, which will then have to be subsidised by us. Our own insurance sector is growing up; let's not throw out the baby with the bathwater in the name of competition." |
| The senior Congress leader had similar views about increasing the FDI cap in air transport services. |
| "First allow our people to grow and then open. For competition and efficiency, encourage domestic companies," he said. |
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