The Hindu : National : CPI(M) will oppose move to amend IRDA

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Wednesday, Jul 14, 2004

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CPI(M) will oppose move to amend IRDA

By Our Special Correspondent

NEW DELHI, JULY 13. The Communist Party of India (Marxist) today asserted that it would oppose in Parliament any move to amend the Insurance Regulatory and Development Authority (IRDA) for raising the cap on Foreign Direct Investment in the sector.

Addressing a press conference here, the CPI (M) MPs, Nilotpal Basu and Basudeb Acharia, said that if the United Progressive Alliance (UPA) brought forward legislation incorporating an amendment to the IRDA to raise the cap "we will oppose." The Left parties would then press for voting and recalled that in 1997, following their opposition, the then United Front Government had to withdraw the IRDA Bill.

However, they said the Left parties "will not do anything to pave the way for the Bharatiya Janata Party to come to power and want the Government to continue but want it to confine with the Common Minimum Programme."

The Left parties would not press any cut motion but would ask the Government to amend some budget proposals that were not in the people's interest.

Mr. Acharia said the Left parties would insist on a coordination mechanism with the UPA. He disputed the Finance Minister, P. Chidambaram's remarks that he had consulted the Left parties on the issue of raising FDI in telecom, civil aviation and insurance. The Finance Minister sought to know the party's views and "we had rejected all the three proposals. We are not in agreement with the proposals (FDI) put by the Finance Minister before us."

As regards insurance, Mr. Basu said the basic opposition was that raising the cap could result in dilution of investment of funds in the social sector. A study of the portfolio held by the private insurance players in the country showed that they were mainly in profit-making sectors and not in the relatively loss-making insurance policies such as third party insurance. The IRDA at present did not have the mechanism to monitor the private sector companies in insurance.

At a time when the Government wanted to spend more on the social sector, the insurance companies were the ones that generated funds and if the FDI limit was raised this aspect would be affected.

As for the telecom sector, he said that instead of legitimising the "loopholes" the Government should plug it. China had allowed FDI only in telecom manufacturing and not in services. At a time when India had taken a lead role in the WTO to hold on to the 49 per cent cap in telecom services, the government's unilateral move gave away the bargaining power or seek reciprocal gain in other areas.

In the civil aviation sector, Mr. Acharia said the move to raise the FDI limit was to align the privatisation of Mumbai and other airports with retrospective effect, but it did not take into account the security issue.

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