Signalling its intent to continue with long-stalled economic reforms, the United Progressive Alliance government on Thursday cleared the pensions and insurance Bills, allowing 49 per cent foreign direct investment (FDI) in both the sectors. Till now, 26 per cent FDI was allowed in the insurance sector while the pensions business was closed to FDI. While Mamata Banerjee’s Trinamool Congress, the Left and some regional parties are opposed to these reform moves, the Bharatiya Janata Party that provides principal Opposition in Parliament has announced that it would like to wait for the fine print of the proposed legislations before taking a position on them.
Since both these decisions require ratification by Parliament, the big challenge for the government will be to mobilise required support from other parties. Unlike the government’s earlier moves of hiking diesel prices and opening the floodgate for FDI in multi-brand retail, the BJP is not opposed to opening up these sectors to FDI. However, in its unanimous report, Parliament’s standing committee on finance, headed by BJP leader Yashwant Sinha, opposed raising the cap on FDI in the insurance sector beyond 26 per cent. According to the party’s national spokesman, Prakash Javedkar, although the BJP is “not opposed to FDI per se, we have to see the fine print as there are many issues of concerns that need to be addressed.”
Realising the ruling alliance’s dilemma, Union finance minister P Chidambaram has said that the government will try to forge a consensus by engaging other parties. If the government is serious about implementing these reforms, it must do so in the spirit of give and take and abjure its confrontationist approach towards the BJP in Parliament. If it fails to do so now, the people will be compelled to view its belated activism merely as political grandstanding to dispel the general perception about its inability to take bold decisions necessary for the security and economic revival of the nation.