Hamstrung by the unanimous recommendations of a parliamentary standing committee, which was in favour of retaining the foreign direct investment cap in the insurance sector at 26 per cent, the government on Thursday deferred a Bill to reform the sector, pending wider consensus.
On Thursday, at a meeting of the Union Cabinet, immediately after the Cabinet Secretary put the Bill on the table, Finance Minister Pranab Mukherjee, without any discussion, announced it had been deferred.
Later, members of the Cabinet said there was no point in discussing a Bill which proposed little or no change in the existing scheme of things in the insurance sector.
Privately, members told one another the matter needed to be discussed widely to build political consensus.
The usual suspects were not to blame for the postponement. The Trinamool Congress, while having stated objections to the Pension Fund Regulatory and Development Authority Bill (because party leader Mamata Banerjee felt hard-earned savings of individuals should not be subjected to vagaries of the markets) had no particular view on the Insurance Bill.
The concern of the government, therefore, did not stem from lack of support from allies. The Bharatiya Janata Party (BJP) was cautious about giving assent to the proposal, but was not vehemently opposed. BJP MPs, in private conversation, had told Mukherjee since the opening of the sector, FDI worth a mere Rs 5,900 crore had come to the country. They said they sensed a scam in which in the absence of the listing of insurance companies, valuation of the companies had not been possible. They had warned the government that agreements may have been struck between foreign investors and their Indian partners to sell out to foreign investors when the government raised FDI caps.