With the government deciding to increase the Foreign Direct Investment (FDI) cap in the insurance sector to 49 per cent just ahead of U.S. Secretary of State John Kerry’s visit, the Communist Party of India (Marxist) on Thursday described it as a “welcome gift” for the U.S. leader and a green signal to the “dodgy practices” that led to the global financial crisis in 2008.
Dwelling on the issue in the editorial of the latest issue of the party organ, People’s Democracy , the CPI(M) said the FDI cap in insurance was being raised to appease the U.S. and finance capital though the record of foreign insurance companies does not inspire any confidence as far as financial stability and proper coverage were concerned.
Referring to the 2008 global financial crisis, the CPI(M) said it starkly exposed the vulnerability of the financial sector in the United States and how people were defrauded by these companies and their dodgy practices to maximise profit.
“AIG, the biggest insurance company, was on the verge of collapse and had to be bailed out by the U.S. Government at a huge cost. Refusing to learn from this sobering experience, the volatility and vulnerability of the deregulated financial system is being imported into India’s insurance and financial sector.”
Pointing out that India’s life insurance sector was nationalised in 1956 after a series of failures and scandals in private insurance companies, the CPI(M) warned of a return to those days. “The risk of entry of profit-seeking foreign companies, investing in high-risk ventures and jeopardising the savings and interests of the people is real.”
