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BJP's opposition to more FDI in insurance imperils the health of the sector, and its own credibility on reform
The Union cabinet has proposed that the foreign direct investment (FDI) sectoral limit in insurance be raised to 49 per cent from the present 26 per cent. But the finance minister's call for supporting the bill continues to face resistance from the main opposition party, the BJP. This, they argue, is with a view to ensure that foreigners do not get to dominate India's insurance sector.
If the BJP has its way, therefore, the low insurance penetration in the Indian economy is likely to continue. The party's opposition is difficult to understand, given that the NDA government had presided over the opening up of the sector to FDI. Like the opposition to GST, this is another policy stance of the BJP that appears to arise more from obstructionism rather than any principled disagreement. The long-term interest of the economy lies in a reduction in the monopoly of the LIC. The domestic private sector does not have the resources and capital required for the growth of this industry. The experience of the last decade has shown that clearly.