Jayalalitha terms Centre's reform blitz diversionary

Tamil Nadu Chief Minister J Jayalalitha on Saturday opposed the proposed 49 per cent foreign direct investment (FDI) in the insurance sector and pension funds in the country.

She also described the latest set of “big ticket” reforms approved by the United Progressive Alliance (UPA) regime as diversionary and detrimental to the common man.

“The UPA’s latest FDI flag is diversionary, more to anesthetise the mammoth corruption charges against the government, especially when elections seem imminent,” Jayalalitha said in a statement here.

The Cabinet approvals were “premature,” as the relevant Bills to hike the FDI limit from 26 per cent to 49 per cent in the insurance sector and allowing up to 26 per cent FDI in pension funds has to be first passed by both Houses of Parliament, where “the UPA faces a number crunch,” she said.

Raising the FDI cap in the insurance Sector to 49 per cent, contrary to a parliamentary committee recommendation, “will prove disastrous,” said Jayalalitha, pointing out that even 26 per cent FDI did not make much of a difference in that sector.

Referring to limiting the capital requirement to Rs 50 crore for insurance companies, Jayalalitha said: “It will result in mushrooming of small companies lacking experience and capability and will be fraught with danger.” Further, FDI in insurance will lead to the emergence and dominance of private players, which may be perilous for the public sector LIC, she warned.

Besides, allowing FDI in pension funds and channelling the savings of elderly persons to “the highly risky and unpredictable capital market” will risk the future of senior citizens, she added.

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