The BJP government may be short on concrete achievements but it makes up for that by prolificity in policy announcements. For sectors like power, housing, agriculture and telecom, it has come up with bright plans which have been instantly forgotten. Now it seems to be the turn of insurance. Though the group of ministers (GOM) on insurance has allowed foreign equity up to 26 per cent in the sector, there is still a question mark on the subject. The Cabinet is yet to clear the proposal and in an atmosphere heavy with swadeshi jargon it will not surprise anyone if the move is scuttled. One possible ground for objection is that 26 per cent is in excess of the one-fourth equity legally required to block a special resolution in a firm - and the potential foreign investor must be prevented from having such control. Questions may crop up even on the proposed total cap of 40 per cent on foreign stake, including that by non-resident Indians and overseas corporate bodies.The need of the moment, however, is not an elaborate debate on policy but some proof of foreign investment actually flowing in. With just about $3 billion of foreign direct investment (FDI) inflow in 1997-98, a mere seventh of China's tally, India is in desperate need of improving its image as a destination for foreign investment. The image problem is not quite a function of fundamentals. The Indian economy after all is still growing and not nosediving like some of the wounded Asian tigers. What makes investors uncomfortable is uncertainties and about-turns in policy. Even a more stringent cap (20 per cent) on FDI in insurance will be accepted by foreign investors so long as they are sure the other measures are falling into place - like changes in the Insurance Regulatory Authority Act and the laws governing LIC and GIC. Instead of splitting hairs over policy, the Government must act. Now..preferred-source-banner{ margin-top: 10px; margin-bottom:10px;}Published By: AtMigration Published On: Nov 2, 1998--- ENDS ---
