Centre takes ordinance route for reforms in insurance, coal sectors

The Centre on Wednesday promulgated ordinances to speed up reforms in insurance and coal sectors after the two bills could not be passed in the month-long winter session of Parliament. With this, the cap on foreign investment in the insurance sector has been raised to 49 per cent from the existing 26 per cent.

The Union Cabinet Chaired by Prime Minister Narendra Modi also renewed an earlier order opening up the coal sector for private players. The executive decree came a day after the Winter session of Parliament ended.

Finance Minister Arun Jaitley told reporters: “The ordinances demonstrate the firm commitment and the determination of this government to reform. It also announces to the rest of the world, including investors, that this country can no longer wait even if one of the Houses of Parliament waits indefinitely to take up its agenda." Key ordinances on insurance, coal and FDI in medical devices were cleared.

The Insurance Laws Amendment Bill, 2008, could not be taken up for discussion in the Rajya
Sabha despite being approved by the Standing Committee on Finance and the Select Committee of the Upper House due to the continuous logjam in the House where the ruling National Democratic Alliance is short of majority.

The Coal Mines (Special Provisions) Bill, 2014, also could not be passed by the Rajya Sabha despite being approved by the Lok Sabha.

Opposition parties attacked the government for taking the ordinance route for such important reform measures. The CPM  even wrote to President Pranab Mukherjee not to sanction the ordinance on coal and insurance. Senior CPM leader criticised Jaitley saying when he was the leader of Opposition he was against the same insurance bill.

The Trinamool Congress said using the backdoor route and bypassing the democratic process was extremely “unethical”. Jaitley, who had almost given his commitment to go ahead on insurance and coal reforms despite “political obstructionism” in Parliament,  said raising the cap to 49 per cent in insurance would result in capital inflow of up to $8 billion.

India Inc welcomed the insurance reform saying it would create positive environment for investment in the country.

"The increase in FDI limit from 26 to 49 per cent will help attract the much-needed and long-term capital for the sector and would have multiplier effect on the state of economy especially in meeting the huge infrastructure financing requirements,” the Confederation of Indian Industry said.

Assocham, however, said, “It would have been much better and more convincing to the investors if political consensus was reached on the reforms and the insurance bill”.
With the clearing of coal ordinance, the auction process of coal will begin on Thursday. The auction will initially start in 24 mines.