Moving at rapid pace, the Union Cabinet on Wednesday approved key insurance and coal sector reforms which were stuck in Parliament logjam and also liberalised foreign investment policy in the medical devices sector.
A day after the conclusion of the Winter session of Parliament, the Cabinet approved promulgation of the Ordinance on Insurance Bill, re-promulgation of the Coal Ordinance and allowing up to 100 per cent FDI in medical devices in the pharmaceutical sector under the automatic route.
Briefing reporters, Finance Minister Arun Jaitley expressed the hope that hiking of the foreign investment cap in the insurance sector to 49 per cent, which has been pending since 2008, will result in capital inflow of USD 6-8 billion.
“The Ordinance demonstrates the firm commitment and determination of this government to reforms. 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,” he said.
The Insurance Laws Amendment Bill, 2008 could not be taken up for discussion in Parliament despite being approved by the Select Committee of the Upper House because of the uproar over the conversion and other issues.
The Coal Mines (Special Provisions) Bill, 2014 has already been approved by the Lok Sabha during the session but could make no progress in the upper House.
The re-promulgation of ordinance on coal will facilitate e-auction of coal blocks for private companies for captive use and allot mines directly to state and central PSUs.
Liberalising of the FDI policy for the medical device segment in the pharmaceutical sector is expected to help attract more investments and boost the domestic manufacturing.
Jaitley said the insurance amendment Bill has been pending in Parliament for a “very long time” although it was approved by the Standing Committee as well as the Select Committee of the Rajya Sabha.
“Even though the Select committee by majority has recommended the Bill for adoption, the same was not permitted to be taken up for discussions because of disturbances in the Rajya Sabha.
“The government therefore decided to recommend to the President the promulgation of the insurance amendment laws. The Ordinance is exactly and verbatim of the recommendations of Select Committee,” the Minister said.
There are 52 insurance companies, of which 24 are in the life insurance business and 28 in general insurance segment. The total capital deployed in the private life insurance sector is close to Rs 35,000 crore. With FDI at 26 per cent, foreign equity is close to Rs 8,700 crore.
Talking about re-issuance of coal ordinance, the Finance Minister said the Lok Sabha has cleared the bill, but the Rajya Sabha could not take it up for discussion.