|Let's play politics, it's fun|
|Saturday, 10 December 2011 00:00|
No justification for Standing Committee behaviour
The sharp deterioration in India’s growth, it appears, has escaped the notice of not just the Opposition but sections of the government itself. In one stroke, the Standing Committee (SC) of Parliament has demolished the insurance and banking Bills, thrown out the UPA’s flagship UIDAI project and, if things go to plan, the pension Bill will go the same way. We’ll have to wait for the final reports to come in to know if UPA MPs went along with the Opposition in the SC, but how do you explain what happened in the UIDAI case where, despite the finance minister being in favour of the Bill (the home ministry has been batting for its National Population Register, NPR), finance ministry babus told the SC they were worried about the ‘dual expenditure’ on UIDAI and NPR, a fact the SC has latched on to. The blame for this has to be put squarely on the government that did not clarify the role of UIDAI and NPR.
In insurance, raising the FDI cap from 26% to 49% is critical if firms are to gather the necessary funds to raise India’s insurance penetration of a mere 5%. Given that the insurance regulator, IRDA, strictly monitors insurance companies, it’s difficult to figure out what SC’s objection was. Ditto for the pension Bill where SC wants a 26% cap enshrined in the Bill and wants minimum assured return as in the EPFO/EPS—given that with even its limited coverage, the hole in the EPS is already R50,000 crore, this makes the pension business unviable. Banking is even more absurd since RBI okayed the removal of the 10% voting cap and said that voting would be in proportion to equity—as for safety of banks, the Bill provides for RBI superseding any management that is not ‘fit and proper’. By reintroducing a voting cap, of 26%, SC has made it more difficult for banks who need capital to expand. So the SC is either playing politics or it doesn’t think hands-on regulators like RBI/IRDA/PFRDA can safeguard public interest as well as a distant and fractious Parliament can.