The parliamentary standing committee on finance has approved the setting up of the Insurance Regulatory Authority of India (IRAI) and has decided to delink the insurance watchdog body from the larger issue of allowing private entry into the sector to ensure a smooth passage for the relevant bill in Parliament.
The move to consider the two issues separately is aimed at overcoming the differences among the members.
While the Left parties have been opposed to allowing private firms into the sector, the Bharatiya Janata Party (BJP) has been opposed to allowing entry to foreign firms.
The formula is likely to ensure that the bill on the watchdog body does not attract opposition when it comes up for discussion in Rajya Sabha on April 21 from its antagonists, who now have the opportunity to examine the wider question of the sector's privatisation.
The bill has been passed by the Lok Sabha.
Till now, the 43-member House committee headed by Biju Patnaik had been unable to take a view on the bill since it was being examined within the larger context of the opening up of the sector.
The members of the committee include Murli Manohar Joshi, Satish Agarwal, Som Pal, Renuka Chwdhury, Gurudas Das Gupta, Biplab Dasgupta, Nirmal Kanti Charterjee, Sanjay Dalmia and K K Birla.
Owing to the differences over the issue of deregulation, the committee failed to muster the quorum for its meeting scheduled for March 10.
Similarly, the meeting scheduled for March 20 was also threatened till the committee decided to view the two issues separately.
Finance minister P Chidambaram has announced the privatisation of the health insurance sector in his budget speech recently.
While the majority holding would have to be domestic, the government is considering whether private foreign entry could be permitted in this sector up to 49 per cent.
The committee has made several recommendations which will be the major points of the debate on the bill in the Upper House. The committee has recommended that the following amendments to the IRAI bill:
* Specific provision in the bill to provide that experts should be appointed to the IRAI;
* Provisions for reappointing retired members for an additional term;
* Permitting re-employment of members, including private sector re-employment.
To ensure independence of the members on the regulatory authority, the bill bars them from seeking re-employment at the end of the five-year term.
The Committee has explained that a bar on re-employment will stand in the way of the IRAI attracting young persons for appointment as members. The House committee has also recommended that restrictions on re-employment should not be binding on the part-time IRAI members.
Apart from the insurance sector reforms, the parliamentary committee is also examining capital market reforms and the demand for grants by the finance ministry.
