Government on Thursday unleashed a second wave of reforms deciding to open the pension sector to foreign investment and raising the FDI cap in insurance to 49%, undeterred by opposition to its decisions on FDI in retail and threats to block these legislations.
The Union cabinet cleared a raft of big-ticket legislative proposals including the new Companies Bill, amendments to Competition Act and Forward Contracts (Regulation) Act.
"The Cabinet has approved necessary official amendments in the Insurance Laws (Amendment) Bill, 2008...it also approved introduction of certain official amendments to Pension Fund Regulatory and Development Authority Bill, 2011, Finance Minister P Chidambaram told reporters while briefing on the Cabinet decision. "We hope these will be passed in the next session of Parliament," he said.
Apparently anticipating resistance, Finance Minister P Chidambaram said that the government would reach out to political parties, especially the principal Opposition BJP, in seeking their support for passage of the Bills on insurance and pension sector in the Winter session of Parliament.
Trinamool Congress, which a fortnight ago withdrew support to UPA, and the Left parties, vowed to defeat these bills in Parliament.
Significantly, the Cabinet decided to fix a cap of 49% of FDI in the insurance sector raising it from 26%. While doing this, it straightaway took the cap in the pension sector to 49% saying it generally follows the insurance sector.
The 49% cap is much higher than the 26% recommended by the Parliamentary Standing Committee on Finance headed by BJP leader Yashwant Sinha.