With no allies barring the Rashtriya Lok Dal (RLD ) present at today’s Cabinet meeting, the United Progressive Alliance (UPA) pushed through crucial reforms including allowing foreign direct investment (FDI) in pension up to 49 per cent and increasing the cap on FDI in insurance from 26 to 49 per cent.
No representative of the Dravida Munnettra Kazhagam (DMK) or the Nationalist Congress Party (NCP) were present at the meeting today.
Chidambaram said that the Pension Fund Regulatory Development Authority (PFRDA) Bill and insurance reform had been pending for decades. He argued that the insurance sector reform will affect only a minuscule section of the population. He pointed out that only 5 per cent people in India invest in insurance.
The finance minister justified the move, saying that the insurance sector required huge amounts of investment.
Since he took over the finance ministry, Chidambaram has been pushing for bold measures to revive the economy. In the Cabinet meeting, he reiterated that the road ahead is very clear.
Having rid of the Trinamool Congress (TMC) baggage, the UPA government had unleashed its first set of reforms three weeks ago.
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Former UPA ally TMC had vehemently opposed the FDI in pension and insurance sector, labelling them ‘anti-people’. During the three-year coalition with TMC as an ally, the UPA could not decide on these Bills.
Business Standard had reported earlier that the southern ally DMK was wary of being seen to be a party of these so called “anti-people” measures and would give the Cabinet meeting a miss. Chemicals and Fertiliser Minister M K Alagiri was absent from today’s meeting. The official reason was that he was in Mumbai attending the ‘India Chem 2012’, which was inaugurated by President Pranab Mukherjee.
However, sources say that Alagiri chose to stay on in Mumbai and not return to the capital today. Had he wanted, he could have returned by 4 pm to Delhi, in time for the Cabinet meet.”
The other long-standing UPA ally, the NCP was also absent as Agriculture Minister Sharad Pawar was in Vietnam on an official engagement. Heavy industries minister and the second NCP minister Praful Patel was also not present at the meeting.
RLD’s Ajit Singh was the only other ally present. The problem before the UPA will now be to get these two bills passed in Parliament. Congress sources say that they are aware that without the cooperation of the Opposition, they are unlikely to get it cleared in the Rajya Sabha. “But we are hopeful of getting it passed,” said a senior Congress functionary.
The DMK, which is the largest ally of the UPA, is not keen to rock the UPA boat after the TMC exit. However, the party has criticised the “bold economic decisions” of the UPA such as capping the number of subsidised LPG cylinders and diesel price hike. DMK chief M Karunanidhi has spoken out against FDI in multi-brand retail.