Centre decides to push insurance, coal reforms through President's seal ... - Economic Times

NEW DELHI | MUMBAI: The Narendra Modi government decided to issue ordinances on Wednesday to raise the overseas investment limit in insurance and kick off the coal mine auction process, saying this was a reflection of the urgency with which the administration views the need for policy changes to boost the economy and lift up flagging investor sentiment on India.

The emergency measures were needed as the opposition was being needlessly obstructionist in Parliament and refusing to approve legislation on coal and insurance, Finance Minister Arun Jaitley told reporters after a meeting of the cabinet, which recommended the issuing of the ordinances. "The ordinances demonstrate the firm commitment and the determination of this government to reform," he said.

"It also announces to the rest of the world including investors that this country can no longer wait even if one of the houses of Parliament waits indefinitely to take up its agenda... There was a huge delay, therefore the urgency."

The decision was made a day after the end of the winter session during which the opposition disrupted Parliament on the issue of religious conversions. Raising the limit on overseas investment in insurance to 49% from 25% could see the fundsstarved sector get $6-8 billion dollars but most companies have been guarded in their response and have indicated they would wait for the ordinance to become law before making any such move.

The coal ordinance, which was re-promulgated, will pave the way for the auction of coal blocks cancelled by the Supreme Court earlier this year. The ordinance is "exactly and verbatim in terms the recommendations of the select committee", Jaitley said, suggesting that the opposition should not have any objections to it. Nevertheless, the Congress party has opposed the government taking the ordinance route.

Senior advocate Harish N Salve was unequivocal in his support for the government action. "This is absolutely the right thing to do. These are not bills that have been rejected by the House. In that case, it would have been an abuse of the Constitution," he said. "This is a very good global signal. This is India's moment. Other economies are slowing down, except the US. If you are going to stop reforms, you are going to lose an opportunity." The insurance ordinance comes barely a month before US President Barack Obama's India visit—he will be chief guest at the country's Republic Day parade on January 26.

Insurance-related stocks gained on Wednesday with Reliance Capital up 4% to Rs 498.4, Max India up 1.8% and Aditya Birla Nuvo by 0.7%. A long-standing demand of US companies, the insurance bill has been stuck for a long time. The standing committee of Parliament had approved the bill. Thereafter, the Rajya Sabha constituted a select committee to examine the legislation again. The panel approved the bill with some modifications, all of which have been incorporated, Jaitley said.

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