It’s a case of “in for a penny in for a pound”. If the Opposition is stirred up already against the opening up of retail business to FDI, why not jump in with insurance and pensions too.
New York Times: “In their second major effort in two months to revive a flagging economy, Indian policy makers on Thursday proposed letting foreign investors take a bigger stake in insurance and pension companies.
The measures, which were approved by the cabinet, will now go to the Parliament, where their passage is far from certain. The national governing coalition led by the Indian National Congress Party does not have a majority in the legislature, and opposition parties and even some of its own allies have said they do not support greater foreign investment.
Still, anticipation of the changes sent the India’s benchmark stock index Sensex up 1 percent to its highest close in more than a year.
The index has rallied about 5 percent since the middle of September, when the government allowed greater foreign investment in retailing and aviation and reduced government energy subsidies.
Under the proposal approved by the cabinet, foreign companies would be allowed to acquire up to 49 percent in Indian insurance and pension firms, a change that both Indian and overseas firms have long lobbied for, saying that the sectors needed more capital to grow.
Foreign companies are now allowed to hold a 26 percent stake in insurance companies but are not allowed to invest in pension firms. India’s insurance premiums total about $40 billion a year and its pension industry has assets of $300 million.
The changes will most likely face stiff opposition in Parliament, which was paralyzed during its last session after the opposition Bharatiya Janata Party repeatedly interrupted proceedings to demand the resignation of the prime minister, Manmohan Singh, in connection with a scandal involving the allocation of coal concessions. The next session of Parliament begins in November.
Opposition officials, who were involved in drafting the proposals at an earlier stage of the lawmaking process, have said that they would not support an increase in foreign investment to 49 percent. Some of the government’s allies have also said they do not support the change.
“Legislation in democracy is a process of negotiation and discussion,” Palaniappan Chidambaram, India’s finance minister, said at a news conference.
“Obviously, we need to talk. We will sit and talk to all parties, especially the principal opposition.””
via India Moves Again to Ease Way for Foreign Investment – NYTimes.com.
CHINDIA ALERT: You'll be living in their world, very soon 