Seeking to move ahead on crucial reforms, the Cabinet on Wednesday approved the ordinance route for coal and insurance reforms. Frustrated by the opposition in its bid to get parliamentary approval for two crucial items of legislation, the government took up ordinances to raise the overseas investment limit in insurance and facilitate coal mine auctions.
Government approved promulgation of an Ordinance to hike Foreign Direct Investment (FDI) cap in the insurance sector to 49 per cent from 26 per cent, as the legislation could not be passed in the Parliament session that ended on Tuesday.
The Insurance Bill, which has been pending since 2008 in the Rajya Sabha, seeks to increase the composite foreign investment limit in insurance companies to 49 per cent from current level of 26 per cent.
The 49 per cent cap would include both FDI and foreign portfolio investments.
The proposed hike in foreign investment limit to 49 per cent in the insurance sector has potential to attract up to USD 7-8 billion (about Rs 50,000 crore) from overseas investors, giving a major boost to the segment.
The total capital deployed in the private life insurance sector is close to Rs 35,000 crore. At FDI at 26 per cent, foreign equity is close to Rs 8,700 crore.
The Insurance Laws Amendment Bill, 2008 could not be taken up for discussion despite being approved by the Select Committee of the Upper House because of the uproar by opposition parties over the conversion and other issues.
The last day of the winter session was again stalled by opposition parties with the Lok Sabha and Rajya Sabha adjourned sine die on Tuesday.
The Upper House was disrupted over the issue of religious conversions and failed to conduct any significant legislative business. The government is keen to send out a strong signal regarding its intent to carry out policy changes by issuing the ordinances, officials said.
Cabinet approved re-promulgation of an Ordinance to facilitate e-auction of coal blocks for private companies for captive use and allot mines directly to state and central PSUs.
The Coal Mines (Special Provisions) Bill that was moved to replace an ordinance issued earlier was passed by the Lok Sabha in the winter session but it could not be taken up in the Rajya Sabha.
The government promulgated the Coal Mines (Special Provisions) Ordinance, 2014, in October to facilitate coal block auctions after the Supreme Court cancelled 204 coal blocks in September.
The bill provides for the allocation of coal mines and vesting of the right, title and interest in and over land and mine infrastructure, together with mining leases, to successful bidders and allottees through a transparent bidding process.