Mr. Chairman, Sir, I must say that looking at the empty Treasury Benches I can say that instead of addressing the Members of this House I am addressing the embers of this House.

          Anyway, it is clearly a Constitutional anomaly, Mr. Chairman, that the Government has sought to introduce in this House this Insurance (Amendment) Bill which is similar to the Bill pending in the Upper House, the Rajya Sabha. Both the Bills have exactly the same context and introduced for exactly the same purpose of reforming the insurance sector in our country.

I mentioned the word Constitutional here because the Government by doing so has really acted contrary to the simple and express provisions of article 107 of the Constitution of India which enunciates the procedure for passing a Bill. Article 108 further describes a situation where the Bill has been passed by one House and has to be transmitted to the other House. Our Constitution clearly intended that the Bill can only be transmitted from one House to the other after passing it in one House.

Here you have got a Bill stuck in one House and being offered to the other House. This is simply not correct in terms of Constitutional practice, Mr. Chairman. So, when the Rajya Sabha has not yet passed the Insurance (Amendment) Bill, how is it that we can attempt to pass it in this House? The Government’s position is that since the Rajya Sabha Bill is dated 2014 and the Lok Sabha Bill is dated 2015, technically it is a different name and a different Bill.

We have always known that this Government, Mr. Chairman, is a name-changing Government and not a game-changing Government. Nonetheless, the content of both the Bills is the same. That Bill, therefore, remains the property of the Rajya Sabha and it cannot be discussed in this House if we are to uphold the authority and the power of the Council of States. Or, are we to believe that the Government thinks it has attained supremacy over both the Houses of Parliament? It is a serious question, Sir, because the Government’s inability to pass the Bill in the Upper House has pushed us into an unnecessary deliberation which, as you can see, most of the Members are boycotting.

I do not know whether I should consider this Bill with the sincerity and the seriousness that is required by such an issue because the Government may eventually choose to withdraw this Bill and adopt the version pending before the Rajya Sabha.

Sir, let us waive the quorum because I have a flight to catch also. … (Interruptions)

Since we have decided to go ahead with the debate I will now proceed, Mr. Chairman, to make my argument.

          We all know that insurance is a multidimensional feature, it achieves a social purpose, it produces a new source of capital for our country for developing financial institutions, it mitigates risk and motivates people to venture into unexpected territory. All of this is fine.

I am surprised that the Treasury Benches have not yet traced the roots of insurance to the Manusmriti, the Dharmashastra and the Arthashastra because had they done so they would have been right in doing so. The ancient texts mention the practice of pooling resources for redistribution during calamities such as fires and floods and so on. Of course the modern day insurance system would not bear much resemblance to its ancient counterpart, but the idea remains the same.

          Insurance is about safeguarding the interests of the people from loss and uncertainty by spreading risks over a large number of people. This is something which is obviously vital for the growth of our economy for it channelises large resources for infrastructure and industrial development and strengthens the risk-taking abilities of a country. It is a source of employment, it creates additional jobs, and it helps us raise capital for new ventures.

          I want to talk about the need for medical insurance because rising medical costs in our country have created a great deal of understandable alarm. Frankly, Mr. Chairman, the truth is that there is a double tragedy in our country. Many people are bankrupted by illness. They are first laid low which reduces their earning capacity, and then they lose their savings to treat the illness. So, health insurance is extremely important because you want to prevent your working population from being burdened by extreme debt.

          Yet, 90 per cent of our population has no health insurance. In fact 70 per cent of the total expenditure on health in this country is made by individuals. So, the need to strengthen the sector is self sufficient. This is why the UPA Government came up first of all with our version of this Bill.

The Indian insurance industry has entered a state of unrest. It is marred by slow growth, rising costs, deteriorating distribution structure, and stalled reforms. And that is why in 2008 we brought in an Insurance (Amendment) Bill to the Rajya Sabha. It was then criticized by the then principal opposition party now occupying the Treasury Benches.  They wanted us not to reform the insurance sector.  Frankly, this is the politics of opportunism, not the politics of principles.  Today, we see the same people sitting in the Government not only accepting our reforms but also introducing a Bill to implement them and more.  So where you stand depends on where you sit.  Now that they are sitting there, their stand has changed. 

This Government, while in opposition, had repeatedly opposed the FDI in the insurance sector and they said they were safeguarding the interests of the people.  Now apparently the same interests of the same people are no longer relevant to this Government because they are pushing not one but two Bills to put FDI in the insurance sector, one in each House.  It seems that suddenly the inflow of foreign funds and balance sheets of the insurance companies are more appealing to the BJP than their previous convictions. 

I do want to say that I have no problem with the principle of FDI in insurance.  Increasing the FDI to 49 per cent from 26 per cent was our proposal as well.   We wanted to bring in more capital into the insurance sector.  Because of the fact that thanks to the reforms that had already come into the sector, the number of insurance companies has gone up from 9 nationalized companies in 1999 to 53 companies by 2014.  All the reforms that we wanted to bring in could have been brought in, had this party now sitting in the Treasury Benches not opposed and obstructed the UPA’s Bill for 6 years.  What they have done, however, is that they have taken our Bill and added about 100 unnecessary amendments to it.  It has now been repackaged as the NDA’s Insurance Bill. This Government is very good at repackaging. 

They also want to permit Foreign Institutional Investments besides increasing the FDI limit.  This combination is troubling.  The Foreign Institutional Investment remains an extremely volatile form of foreign investment.  It is a speculative form of foreign investment.  Portfolio investments can be liquidated at very short notice and repatriated immediately.  The FIIs in fact are rather like financial tourism.  They can come and go whenever they like on short-term visas.  Can the country afford this?  The fact is that the funds under FIIs generally flow into a secondary market.  Therefore, they may not specifically ensure availability of capital for insurance sector in comparison to FDI which will directly boost the insurance companies.   So, we argued in the UPA’s Bill that it is enough for the insurance companies to raise money through the FDI route alone and the need for FII does not arise.  Putting both FII and FDI together raises troubling question because it leaves Indian markets vulnerable and subject to global insecurities and instabilities which we had resisted in the past.  After all, this very point was made by the BJP’s own hon. Shri Yashwant Sinha- Mr. Pokhriyal has already quoted him- in May 2012 and I commend him to his son, the young Minister sitting before us, to kindly consult his paternal wisdom here.  We actually had survived the stress and strain of the global financial crisis of 2008 onwards because we had actually resisted managing to link these things together. We reduced the vulnerabilities to the international market.  What the BJP Government is doing is adding risk without any accurate or reliable estimate or possible reward. 

Meanwhile, they have gone into tremendous paradox because they have loosened this whole thing in one area which means the worst of both worlds because they have large FIIs for instance, but on the other hand, they are tightening too much because they are defeating the very purpose of the Bill by introducing new restrictions that were not there in the UPA’s Bill.  I will give you a couple of quick examples.  They brought in restrictions for foreign investors.  They are insisting now on full Indian management.  The foreign shareholders cannot appoint CEOs.  They are supposed to bring in money but have no say in the company.  I want to know whether the foreign shareholders will be willing to pump in investments without any control seems to be a dubious possibility.  Then they have actually required that insurance companies have to pay annual fee to the Insurance Regulatory and Development Authority and if there is any failure to do so, immediately their registration certificate will be cancelled.  But then what will happen to those people who are insured by these companies?

The point is, the BJP Government is not thinking about the people.  I have barely spoken 6-7 minutes.  I was supposed to have much more for my party to initiate this debate.  … (Interruptions)

One additional risk is that there is no guarantee that FDI and FII investments will constitute new money or fresh infusion of capital into the insurance. What protection Mr. Minister can you build into the law to ensure that FDI just does not become an opportunity for allowing the existing Indian shareholders to make a quick buck by selling their shares to foriengers and exiting? What we need to do is to ensure that FDI and FII is only limited to additional shareholders or new capital that is coming into the insurance industry. All of these provisions, I would urge the Minister to consider.

          I am skipping some other points but I am happy to pass them on to him. But I do want to warn him about the punitive attitude he has embedded into this Bill - the drastic increases in the punishments, the fine applicable, the imprisonment term for certain contraventions under the Act – I have got a number of details of sections that have listed all this – the upper limit of the penalty going to Rs. 25 crore from Rs. 5 lakh. It was Rs. 5 lakh in the UPA’s Bill but Rs. 25 crore in theirs. These are not justifiable in terms of the nature of the offences. I would urge the Minister to review the proposed fines to ensure that the penalty actually serves as an effective deterrent and does not force the perpetrators to invariably appeal against the order of the penalising authorities, as a high appeals rate will only cost the exchequer more and not help the Government to raise revenues through fines. … (Interruptions)

          The minimum equity capital for health insurance has been raised to Rs. 100 crore but as I had explained earlier we need more Indians to have health insurance. Do we want more Indians to be bankrupted by illness? The Government must think about the people of this country. The equity capital requirement could have been maintained at Rs. 50 crore as in the UPA’s Bill similarly in order to make it easier for insurance companies to come into health insurance. … (Interruptions)

          Just to stress, having done all of this, they could have actually strengthened the regulatory side instead. The IRDA could have been given the powers to make necessary regulations in consultation with the Medical Association. They have not thought of that. That could be a simple doing.

          They have an inadequate appellate authority. The Securities Appellate Tribunal is the body they have appointed to hear appeals but they have not provided for any insurance experts on this Tribunal. So, how will the purpose of actually having appeals on insurance work when the SAT has no one there? There is no relevant expertise on the panel.

          I hope the Government will consider these suggestions. I am happy to give more details to the Minister since you have cut my time short, Mr. Chairman, but I have to concede that though we were in favour of the substance and of the principles of the Bill, the problems pointed out by us will make it very difficult for us to support the Bill in its current form. … (Interruptions)

 I just want to stress that for the reasons I have summarised in my very brief interventions we are unable to support this Bill in the form in which it has been presented to the House.

          Thank you, Sir.