Both Congress and BJP have argued for and against the insurance Bill. Now, they must work together and pass this key reform measure
What is the politics behind the Insurance laws (Amendment) Bill, 2008IJ It is stuck in Parliament, more for political reasons than due to its merits (or the lack thereof). There is no doubt that the Congress and the BJP have been on the same page with regard to most economic policies, or else the reform process could not have moved forward in the past two decades. The Insurance Bill, however, has become a casualty of the politics being played by the parties, particularly the Congress and the BJP.
When the Bill was introduced in 2002 by the Vajpayee Government, the Congress, which was then in the Opposition, resisted it. When the Congress-led UPA Government, with by Prime Minister Manmohan Singh at the helm, brought the Bill in 2008, raising the foreign investment cap from 24 per cent to 49 per cent, the BJP opposed it. Politically it was convenient for both to oppose the Bill. Now it is the turn of the Congress again to oppose, when the BJP has brought the Bill, raising the cap to 49 per cent.
The insurance sector is important, as many Indians are still not covered. The sector is growing at 15-20 per cent annually. Together with banking services, insurance services add about seven per cent to the country’s GDP and provide long-term funds for infrastructure development, besides strengthening the country’s risk-taking abilities.
The Congress is still smarting from its defeat in the lok Sabha poll but it can flex its muscles in the Rajya Sabha where the NDA is in minority. The Congress has mobilised the support of 11 other opposition parties including the Samajwadi Party, the Bahujan Samaj Party, the left parties, the AIADMK, the National Conference and the Trinamool Congress to stall the Bill, and the BJP is unable to break this unity.
Why is the BJP keen to get the insurance Bill passed at whatever costIJ Union Minister for Finance Arun Jaitley is willing to go more than halfway to achieve this. The Prime Minister is going to the US next month for his first meeting with US President Barack Obama, and it will help if he is armed with the passage of an important financial reform, which the US and other Western countries have been insisting on. As it is, India-US relations are not on the best of terms due to various issues, including the denial of a visa to Mr Modi earlier, the recent impasse at the World Trade Organisation, delay in initiating reform measures and the lack of progress in the nuclear energy sector.
Despite overtures from the Obama Administration, the recent visit of US Secretary of State John Kerry was not a great success. Therefore, Mr Modi would like to show some forward movement in the insurance sector. But, it is clear that the Opposition does not want to provide him that opportunity. Hence, it is insisting on sending the Bill to a Select Committee for further scrutiny in view of the new amendments introduced by the Modi regime.
The Union Government received a shot in the arm when the Congress’s ally, the Nationalist Congress Party, announced its support for the insurance Bill, which has also been backed by the Biju Janata Dal. The BJP was hopeful of winning over the SP and the BSP but with numbers favouring the Opposition, it faces an uphill task. There are not too many options for the BJP if Mr Modi has to leave for the US armed with this insurance reforms Bill. That is why Mr Jaitley had even offered to change the language of the Bill to suit the Congress but the latter has its own games to play.
The Union Government can convene a joint session of Parliament, under Article 108 of the Constitution, and forcibly pass the Bill but this can only be done when either of the two Houses has turned down a Bill — a condition which cannot be fulfilled until the Select Committee returns the Bill for voting.
There can be a way out of this mess if the Congress agrees to work with the ruling coalition and chalk out an formula acceptable. Then, it will also be seen as a constructive opposition. This is the first test for the Modi Government to push through reforms. If it fails, it will send a message that Mr Modi is not serious about his campaign promises.