Chidambaram confident of building consensus on 49% FDI in Insurance sector
The Finance Minister Mr P Chidambaram has expressed confidence that he would be able to convince the principal opposition and other parties to back the 49 per cent FDI in the insurance sector.
Interacting with media in Mumbai, after a series of meetings with financial regulators and investors, Mr Chidambaram said there have been broad agreements over most of the recommendations of the Standing Committee. “Only on FDI the Standing Committe has recommended to keep the limit at 26 percent” he said.
The Finance Minister stressed that the insurance sector needs huge amount of money, and if the FDI limit is kept at 26 per cent, no additional funds are going to flow in.” Most insurance companies promoted by public sector banks are in need of massive capital infusion. When the banks themselves are facing funds crunch for their own capitalization, how can you expect them to pump in funds” he asked. Raising the FDI limit to 49 % will bring in foreign funds which will benefit the Indian insurance industry, he said. Mr Chidambaram added that the Insurance Regulatory Development Authority and all the insurance companies – both life and general have backed the 49 % FDI proposal.
Mr.Chidambaram informed that over the next few days he will be discussing the issue with other political parties. “I am quite confident of convincing them to back the proposal” he said.
The FM then said with the passing of the Insurance Bill, the Pension Fund Bill would also have a smooth sailing.
Speaking about inflation, Mr Chidambaram admitted that some of the measures taken by the government, like increase in diesel prices would make the inflation go up in the short run, but expressed confidence that inflation would come down over long term beyond 6-8 weeks.
Mr Chidambaram held meeting with the Governor of Reserve Bank of India in the morning. He also met with the Board Members of SEBI, Association of Mutual Fund Investors and FIIs during his first visit to Mumbai as the Finance Minister in UPA II government.