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Lok Sabha okays hike in FDI in insurance sector

Last Updated 04 March 2015, 21:13 IST

The Lok Sabha on Wednesday passed a bill to increase foreign direct investment (FDI) in the insurance sector from 26 per cent to 49, setting the stage for a confrontation with the Opposition in the Rajya Sabha.

The Insurance Laws (Amendment) Bill, a key economic reform measure of the Modi government, was passed by the Lok Sabha by a voice vote after rejecting a number of amendments moved by the Left parties. The Congress abstained from voting in the Lok Sabha.

The bill seeks to replace the Insurance Laws (Amendment) Ordinance that was promulgated by the government on December 26, 2014, two days after a united Opposition stalled the legislation in the Rajya Sabha.

The bill was cleared by the Lok Sabha with ease. The Modi government will have a tough time getting the bill passed by the Rajya Sabha, where the NDA is in a minority. The Congress has already indicated that it will oppose the bill “on procedural matters” in the Upper House. The Congress is the single largest party in the Rajya Sabha.

The Modi government may opt for convening a joint session of Parliament if the bill is defeated in the Rajya Sabha, Minister of State for Finance Jayant Sinha told reporters outside Parliament after the Lok Sabha passed the bill.

The bill can get the Rajya Sabha nod if the Congress abstains from voting as it did on Wednesday. Congress sources said they were yet to finalise their stand in the Rajya Sabha. The draft legislation allows public sector general insurers to raise funds from the capital market and provides for increased penalty to deter multilevel marketing of insurance products.

Replying to a debate in the Lok Sabha, Sinha said the increase in FDI cap to 49 per cent was necessary as the insurance penetration was low in the country.

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(Published 04 March 2015, 21:13 IST)

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