The Promise of Insurance Reform

With the Rajya Sabha passing the Insurance Laws (Amendment) Bill, the Narendra Modi-led BJP government must be feeling strengthened. The Bill crossed the final hurdle only because its principal bête noire, the Congress, allowed its passage. That it took over six years for Parliament to give its assent to such a widely-anticipated step on the insurance front illustrates the sharp divide — not necessarily ideological — between the two principal players in Indian politics. Convergence of views very often does not lead to a consensus — for obvious political reasons. Nonetheless, the shadow-boxing between these two major national parties has helped trigger a high-voltage debate on the need for reform in the insurance space. The stakes go beyond the political and business constituencies. Insurance reform is only one of the measures the Modi administration is banking on as part of its growth strategy. But the constant polarisation on political lines on key issues is slowing the traction on important fronts and causing uncertainty, that tells on the economy.

Now that the way is clear for 49 per cent foreign holding in an insurance company, will the country see a flood of foreign direct investment? At the moment, the field is laid a lot easier for players. The operating environment has been redesigned to facilitate foreign investors to engage in the long-haul game. Insurance penetration in India, life and non-life put together, was just about 3.9 per cent in 2013, up from 2.3 per cent in 2000, according to Economic Survey 2014-15. This reveals the extent of opportunities available. Interestingly, according to the Survey, private insurers saw a 1.4 per cent decline in their premium in 2013-14 even as the Life Insurance Corporation recorded 13.5 per cent growth. These numbers tell a tale of their own. For long, insurance has been viewed only as a tax-saving tool. The protection element still has not seeped into the mind of the common person. Changing the mindset and spreading the net will involve much time and enormous cost. Competition could invigorate the field by providing greater access and more products at fair prices. Given the dynamics of the Indian marketplace, foreign players could bring to the table new dimensions. The experience elsewhere — as in the automobile industry — suggests that competition makes the consumer demanding. Surely, the Indian insurance field requires a more aggressive customer. The passage of the Insurance Bill will indeed go a long way in reconfiguring India’s position in the global marketplace.

Source:-The hindu

Political price or personal liability?

The United Progressive Alliance (UPA) regime suffered immensely from the perception that it was ‘scam-tainted’. However, the cost of such a tag until now was limited to a massive electoral defeat for the Congress and the prosecution of a few who served in it as Ministers. Even then, its detractors often took care to exempt its Prime Minister, Dr. Manmohan Singh, from personal criminal liability while blaming him for failing to stop his colleagues’ misdemeanours or silently acquiescing in them. It is therefore baffling that Dr. Singh is being summoned to face criminal prosecution, based solely on material evaluated by a judge, without an investigating agency recording an adverse finding against him. Brushing aside the CBI’s initial attempt to close the case, Special Judge Bharat Parashar has proceeded to take cognisance of criminal charges against Dr. Singh, in his capacity as Minister of Coal in the first UPA regime, the then Coal Secretary P.C. Parakh, and well-known industrialist Kumar Mangalam Birla, and three others, in connection with the manner in which Hindalco, an Aditya Birla group company, was accommodated in the Talabira coal block in Odisha, originally meant for Neyveli Lignite Corporation in 2005. Dr. Singh appears to be paying a price for heading a regime that was seen as associated with much wrongdoing. Both he and Mr. Parakh have in the past denied wrongdoing in the Hindalco allocation.

Judge Parashar is forthright in his prima facie conclusion that between the then Secretary, Coal (P.C. Parakh) and Minister of Coal (Dr. Singh), “there was a concerted effort to somehow accommodate M/s Hindalco in Talabira-II coal block” and that it was “the central common objective” of a criminal conspiracy. Held against Dr. Singh is the fact that he allowed the allocation matter to be reopened after he himself had approved the minutes of a screening committee meeting at which it was decided that NLC would get the block. Also, repeated reminders and phone calls had gone from the PMO to the Coal Ministry to expedite the matter. The Supreme Court verdict invalidating all coal block allocations made during the UPA regime highlighted the administrative malaise that gripped its rule. Given the tenor of such verdicts, it was only to be expected that one day Dr. Singh, as its Prime Minister, would be called upon to explain some transaction or defend a criminal charge arising out of it. The summons and impending prosecution show that political accountability is not the only consequence of inaction or the failure to do the right thing when in power. The onus is now on the court to prove that in its summons to the former Prime Minister, it holds Dr. Singh not just politically accountable but personally liable.

Source:-The Hindu

Importance:-G.S.2

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