Bill on insurance faces Left hurdle

The Left parties' opposition to a hike in FDI limit in the insurance sector could become a major stumbling block in the government's plan to introduce a Bill on insurance in the winter session of Parliament.

Finance Minister P Chidambaram, while announcing today that the Bill would be brought in the next session, admitted that it was bound to "stir up" a debate.

After launching two policies of the National Insurance Company Ltd in Hyderabad, he said, "There is nothing wrong in debating. But it must come to an end and we must move along with the rest of the world."

Chidambaram's arguments in favour of reforms in the sector, however, have failed to convince the Left. The UPA allies are determined to veto the most vital part of the proposed reforms""increasing the FDI limit from 26 to 49 per cent""arguing that it will give control of domestic savings to MNCs.

The CPI(M) has prepared a note listing its objections. According to party sources, the note will be given to the government whenever it initiates a discussion on the Bill.

According to the note, there is "no justification" for an FDI hike in the sector as the existing limit had neither hampered nor expanded private life insurance companies in India.

As several Indian sponsors of private insurance companies already have significant foreign ownership, any increase in FDI will result in multinational corporations gaining total management of the companies and domestic savings, the note says.

Aware of the tough path ahead, Chidambaram admitted there were "still some hurdles" in the path of insurance reforms.

Taking an indirect dig at the Left parties, he said, "There should be no ideological or blinkered opposition to insurance sector reforms. There will be some pain during the transition period but at the end of the day we will benefit."