Left sees red at insurance FDI bill

Finance minister P Chidambaram today said the Union Cabinet had yesterday decided to table a comprehensive bill to raise the ceiling on foreign direct investments in the insurance sector from 26 per cent at present to 49 per cent, inviting the ire of the Left front parties.

The current laws restrict foreign participation in insurance ventures to 26 per cent.

Chidambaram told reporters that the union cabinet had approved the introduction of the Insurance (Amendment) Bill, 2008, for amendment to Insurance Act 1938, General Insurance Business (Nationalisation) Act, 1972, and Insurance Regulatory and Development Act, 1999, in the Rajya Sabha on the basis of recommendations made by group of minisers."

The new private insurers have welcomed the decision to amend the Insurance Regulatory and Development Act, 1999, to raise the FDI limit in the sector from 26 to 49 per cent, as it would enable them to expand their capital.

The government's former Left allies that had held the government back from liberalising the sector during the last four years, criticised the decision saying it would "demolish institutions that helped India withstand the impact of global financial crisis."

The bill was referred to the cabinet by a group of ministers after the Left withdrew support to the Congress-led government, on the issue of going ahead with the Indo-US nuclear deal (See: Left Front withdraws support - SP steps in to fill the gap). 

He, however added that the Bill was unlikely to be passed by the present Lok Sabha, due to lack of time, as it will first have to go to a parliamentary committee, once Parliament reconvenes on 10 December, after the current recess.