A decision on increasing foreign direct investment (FDI) cap in the insurance sector that the UPA government will be attempting to push through in the delayed Monsoon session of Parliament is likely to face serious objections from opposition parties.
The BJP and Left parties are on the same page, raising their voices against increasing the foreign investment cap from 26 per cent to 49 per cent in the insurance sector, as decided by the UPA government on Tuesday.
The BJP said that the Parliamentary Standing Committee on Finance had taken a unanimous decision and submitted a report last year agreeing that there was no need to hike the FDI limit in insurance to 49 per cent from the existing 26 per cent. Last October, the Union Cabinet, however, had turned down the parliamentary committee’s suggestion and decided to raise the cap to 49 per cent, arguing that the sector needs funds to increase penetration and for the business to thrive.
BJP leader Ravi Shankar Prasad told reporters on Wednesday that the party has always tried to help the government. However, it cannot be asked to shield corruption and lack of governance.
“The government in panic took the FDI decisions which are not going to impact the Indian economy. The success story of India is under a serious cloud under the leadership of Prime Minister Manmohan Singh and UPA chairperson Sonia Gandhi,” commented Prasad.
The Left also made it clear that it would oppose the proposal at every forum, including Parliament.
“We are strongly opposed to the steps taken by the government. It will not help the Indian economy in any manner. Our economy will become more vulnerable,” D Raja told Deccan Herald.
In a statement, the CPM Politburo said that “the UPA government is out to mortgage the economy to foreign capital”. “The raising of the FDI cap in certain sectors and allowing FDI through the automatic route in some others are desperate measures being adopted by the government faced with mounting economic difficulties,” said the CPM in a statement.
“The proposal to increase FDI in the insurance sector has to be adopted through legislation in Parliament. The CPM and other opposition parties should thwart this move in Parliament,” said the party.
The BJP is also opposed to the increase of FDI cap in telecom from 49 per cent to 100 per cent, with party leaders saying asking what the point is in opening up the sector further when it is not yielding any inflow of funds from abroad.
Though the government might get the numbers in both the Houses, as they did manage to get FDI in retail to pass muster, no investments have come so far, pointed out Prasad.
The opposition party said that the investments are not coming into the country because of corruption, crisis of credibility, lack of transparency. They have to address serious internal crisis first, he stressed.