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Passing insurance bill critical for both govt and industry

business Updated: May 03, 2013 23:40 IST
HT Correspondent

The life insurance sector could alone garner over Rs 7,000 crore as fresh foreign direct investment (FDI) if the government passes the long pending insurance bill, which seeks to increase FDI to 49% even if the capital base remains the same. Besides this, there could be another chunk of FDI for the general insurance segment.

According to the Life Insurance Council, capital deployed as on March 2012 in the life insurance segment was Rs 33,633 crore.

The government, which is trying to address the twin deficits — fiscal and current account — may be relieved if the bill sees the light of the day as the move would significantly help in easing the pressure.
Raghuram Rajan, chief economic adviser at the finance ministry, had earlier underlined the need for an early passage of the bill, pending in Parliament for several years. “It is an important bill and its early passage would help the country substantially,” Rajan said.

“Most companies are ready with their plans of increasing FDI limit once Parliament approves the bill,” a spokesperson at Aviva India said.

A Max New York spokesperson added that the bill would also bring in domain capital which would be critical for the growth of the sector.

The government is also looking at other possibilities which could help in raising FDI ceilings in various other sectors to put economic growth back on track.

The government on Thursday approved Swedish furniture major IKEA’s proposal seeking to invest Rs 10,500 crore.