The amendments in the Insurance Bill that were passed in the Lok Sabha on December 16, paving the way for 100 per cent Foreign Direct Investment (FDI) in the insurance sector, have been slammed by the All India Insurance Employees Association (AIIEA), which has called them “irrational”.
The Insurance Laws (Amendment) Bill raises FDI in the insurance sector form 74 per cent to 100 per cent, reduces the net owned fund requirement for foreign reinsurance branches from Rs. 5000 crore to Rs. 1000 crore, while mandating all Indian laws to apply to the companies that invest in India.
However, AIIEA said they protest against the Bill, saying capital has never been a restraint for private insurance companies with foreign partners that operate in both the life and non-life insurance industry. In fact, since the total FDI in insurance is only around 32 per cent of the capital employed, the amendments are “irrational” since they give total freedom to foreign capital to operate in India.
G. Varaprasad, general secretary, Insurance Corporation Employees’ Union (ICEU) Visakhapatnam Division, condemned the government’s approach, arguing that the changes benefit foreign capital over public interest and threaten the stability of public sector insurers like LIC, which would inevitably lead to strikes.
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The AIIEA said allowing total freedom and greater access to foreign capital could only hamper the orderly growth of the insurance industry with the focus shifting more on profits rather than providing the people much needed security. It will have disastrous impact on the interests of the marginalised sections of the Indian society.
The association futher emphasised that foreign capital cannot be a substitute to the domestic savings. This being the case, handing over domestic savings to foreign capital makes no economic or social sense. India being a welfare State must necessarily have greater State control over the national savings for economic development which benefits all its citizens.
Reiterating the demand for revoking the decision on hiking FDI limit in insurance, the AIIEA leader also warned the government against the retrograde proposal to amend the Insurance Laws including Insurance Act 1938, LIC Act 1956 and IRDA Act 1999. He also sought the reorientation of economic policies from the corporate bias to people centric measures.
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