Govt firm on raising FDI cap to 49% in insurance

The proposal to hike FDI in the insurance sector to 49 per cent from the existing
26 per cent is suicidal. Standing Committee on Finance has rejected the Government’s
proposal to raise the FDI cap. Foreign multinational insurance giants are waiting in their
wings to capture India's vast and rapidly growing insurance market. Experiences of other
developing countries have shown that increased role of foreign capital would lead to
the possibility of exposing the economy to the vulnerabilities of the global market, which
would cause flight of capital besides endangering the interest of policy holders.
Moreover, the decision to raise the FDI cap on pension to 49 per cent is unwarranted.
It is not wise to throw open the huge pension funds to the foreign investors.It will lead
to tying the pension funds to vulnerabilities of the global market.
Dr.C.Murukadas, Business Line, Aug 23, 2012