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Wanted - An Insurance for Insurance Bill !

The first tremor was felt at the press conference hurriedly convened on the morning of December 1, 1998 by the Parliamentary Affairs Minster, Mr. Madan Lal Khurana, while he announced the revised agenda for the winter session. He said that it was decided to exclude the Insurance Regulatory Authority (IRA) Bill among other bills. The agenda originally prepared for the session was too long as the session was of short duration and as many as 45 bills were proposed in the original agenda.

The second tremor came at the India Economic Summit where Union Minister for Power, Mr. P. R. Kumaramangalam, categorically ruled out the passage of the IRA Bill during the winter session. There was no way the bill could be passed at the current session. Adding further shock he gave no guarantee even of its introduction.

All this coincided with the back tracking theory which was floating around with growing protests within the BJP against the insurance reforms. Everything happened barely a week after the cabinet had decided to open up the insurance sector to foreign investment. The PMO was terribly upset over the ‘faux pas’. The Prime Minister fielded Finance Minster Mr. Yashwant Sinha to dispel doubts created by two of his Union Ministers.

Mr. Sinha, speaking at the India Economic Summit, organised by the World Economic Forum and the CII, asserted that the Government would not retrace its steps on insurance reforms and would do its best to get the bill passed in the current session of Parliament. Mr. Khurana was dubbed as ‘poor chap’ by Mr. Sinha, as he was only talking about the week’s business in Parliament. But there were no immediate takers for this interpretation as Mr. Khurana was talking about the entire session’s agenda for the previous two days. However Mr. Khurana followed his own announcement with a ‘clarification’ later in the day that though the IRA Bill was being excluded from the ‘priority’ list it would be brought in the current session itself.

For the people who are well informed about insurance the conflicting statements have not come as a surprise as it is well known that the ‘spirited mentor’ of the Government, the RSS had been extremely unhappy with what was perceived by it as a somersault by the BJP on its own swadeshi stand on reforms in the financial sector. The Swadeshi Jagran Manch, determined to put major roadblocks before the Government’s economic agenda got BJP MPs to attack the move to open up the insurance business.

At a meeting of the party’s Parliamentary Board chaired by the Prime Minister the party MPs raised the issue. Their contention was that the Government’s stand on the insurance issue was against the BJP’s stated position. Even senior leaders of  BJP like former vice president, Mr. K. R. Malkani and party general secretary, Sumitra Mahajan have expressed their misgivings over the Government’s agenda for insurance reforms. The utterances of the party leaders marked a deepening of differences within the party as well as between the Government and a large section of the Sangh Parivar.

The Government still maintains that there would be no backtracking on the IRA Bill. However, with the protests from within the family set to intensify further when the Swadeshi Jagran Manch takes to the streets. It is conceded that strong resistance could result in the quantum of foreign equity being rolled back from the proposed 40 %.

For an objective observer the whole situation appears to be wholly unfortunate for many reasons. For the second time in 15 months, the IRA Bill has run into rough weather. The previous UF Government in August’ 97 had to withdraw from Parliament a pending bill rather than putting it to vote. This time the situation seems to have become more volatile. The point not missed by anyone is that the Government is at the least guilty of not sequencing the reform measures properly. The Government ought to have arrived at a basic consensus on setting up the regulator first. Questions regarding the permitting foreign equity or capital adequacy norms for the new entrants could have been downplayed for the present.

When all is considered, at the end of the year 1998, one of the most important of the economic reforms viz., opening up of the insurance to private sector, seems to have gone back to square one.

What is urgently needed is AN INSURANCE FOR THE INSURANCE BILL !