New Delhi : Finance Minister Nirmala Sitharaman on Monday said it was important to raise the FDI limit in the insurance sector to 744 per cent to address financial pressures in the insurance sector.
He said this while removing the Insurance (Amendment) Bill, 2021 for consideration and passage in the Lok Sabha.
An amendment bill seeking to increase the FDI limit on insurance from 49 per cent to 74 per cent was passed by the Rajya Sabha last week.
“Insurance companies are facing problems related to solvency,” he said, adding that “if growth capital is too hard to come by, a stress situation is created. So that the pressure situation does not stagnate, we need to raise the FDI limit.”
The epidemic of Siviram-19 epidemic has exacerbated the plight of insurance companies.
The Minister noted that the FDI limit is being increased on the recommendation of the regulator IRDAI which has held extensive discussions with stakeholders.
The minister said FDI inflows into the insurance sector have increased significantly since the government decided in 2015 to increase the cap from 249 per cent to 49 per cent.
As much as possible ₹The insurance sector has received Rs 2,000 crore as FDI since 2015, he said, adding that the sector has seen an increase in assets under management (AUM) and 76 per cent in the last five years.
Later, Manish Tiwari (Congress) started debating the bill, saying that when the BJP was in the opposition, they opposed the increase in FDI. He said the then UPA government could not break down the walls provided by the late Sushma Swaraj and Arun Jelly in both the sittings of Parliament.
He said the decision to increase the FDI limit was like a BJP samartolt.
He also mentioned several parliamentary committees where senior BJP leaders, including Yashwant Sinha, opposed the FDI hike.
Tewari said the bill, though small, has far-reaching implications.
Defending the bill, Jagdambika Pal (BJP) said the system was in favor of India’s growth story.
He further said that while increasing FDI in insurance, the government has put adequate security measures in the interest of the people.