Tamil Nadu Chief Minister Jayalalithaa on Saturday strongly opposed the Centre’s decision to increase Foreign Direct Investment (FDI) in the insurance sector and open up the pension sector for FDI up to 26 per cent, contending that the moves were detrimental to the future of the common man.
“This move at best is a gimmick, and at worst, an unworthy risk. The act of disguising harmful decisions and promoting them under the name of grand reforms amounts to deceiving the people of the country. No amount of rhetoric will change the truth,” she said in a statement here.
Accusing the UPA Government of remaining unfazed by the sufferings of the common people, small traders and small farmers, she said that the latest FDI flag was diversionary — more to anaesthetise the mammoth corruption charges against the UPA Government, especially when elections seemed imminent.
“The Cabinet’s approval on these issues, touting these as big ticket reforms which will accelerate unprecedented growth and boost a sagging economy is premature.”
Ms. Jayalalithaa said increasing FDI from 26 per cent to 49 per cent in the insurance sector and opening up FDI up to 26 per cent in pension funds would be operational only if the relevant bills, viz., Pension Fund Regulatory and Development Authority (PFRDA) Bill, 2011, and Insurance Law (Amendment) Bill, 2008, were passed by both Houses of Parliament where the UPA faced a number crunch.
To drive home the point that increasing the FDI cap was unlikely to produce any desirable results, she said nothing appreciable had come out even after allowing 26 per cent FDI in the insurance sector in the past.
“Hiking it to 49 per cent against a Parliamentary Committee recommendation will prove disastrous. As to whether they have the right to jeopardise this crucial sector is a debatable issue.”
Ms. Jayalalithaa argued that limiting the capital requirement to Rs. 50 crore for insurance companies would result in the mushrooming of small companies lacking experience and capability and would be fraught with danger.
“This will unnecessarily expose our public to the risk of uncertainty.”
The Chief Minister said that allowing FDI in pension funds and channelling the domestic savings of elderly persons into the highly risky and unpredictable capital market would place the future of senior citizens at tremendous risk.
“FDI in the insurance sector will lead to the emergence and dominance of private insurance companies, whose motives will be totally commercial. Consequently, public sector companies like LIC, which participate actively in the developmental process, will suffer. As a result, the developmental process of the nation itself will be adversely and severely affected.”