UPA reforms agenda hit again, three major bills turned down:
New Delhi: After the ignominy of being forced to suspend its reforms in retail, the government suffered more injury today - a parliamentary committee has rejected three major bills that were meant to prove the UPA has not been reduced to a government incapable of strident reform.
The Standing Committee on Finance, which is headed by the BJP's Yashwant Sinha, has turned down the Insurance Amendment Bill, a bill on Banking reforms and the National Identification Authority of India Bill 2010 which births the ambitious "aadhar" or UID scheme that's being led by Nandan Nilekani. A fourth bill on pensions has already been withdrawn by the government because of overwhelming opposition from other political parties.
The government is not obliged to obey the Standing Committee. But its attempt to introduce reform in retail despite a lack of consensus taught it the hard way that it does not have the numbers to push through legislation or policy that its allies find contentious.
The Insurance (Amendment) Bill suggests raising the limit on foreign direct investment or FDI in the insurance sector from 26 to 49 per cent; the Prime Minister said earlier this year that the insurance industry needs more capital than what domestic industry can provide. This Bill was once seen as a key expression of the UPA's intent to introduce major reforms in the financial sector. Similarly, the Banking Laws (Amendment) Bill sought to increase the cap on FDI from 26% to 49%.
Today's rejection of the bills suggests what India Inc has been dreading - that when it comes to key legislation, the government will remain painfully pregnant, unable to deliver the economic reforms that the Prime Minister has been heralded for in the past.
The government has already withdrawn Pension Fund Regulatory and Development Authority Bill aimed to attract foreign capital and allow private fund managers to manage the savings of private and public sector workers. Investing in the stock market would be permissible. The Left has fought this on the grounds that it will put hard-earned savings of millions at risk. The BJP wanted the bill to specify a cap of 26% on FDI.
The starring role played by Mr Nilekani, the former main man at Infosys, had made the UID or Unique Identity scheme a high-profile one. The PM's vision, entrusted to Mr Nilekani, was for every Indian to receive a card bearing a 12-digit ID which will be stored in a central database and linked to the individual's fingerprints and other biometric data. But the Standing Committee on Finance has rejected the National Identification Authority of India Bill 2010, diagnosing it as directionless. Among the standing committee's concerns are whether the UIADI is legally empowered to collect biometric data, and the dangers of it being misused.
Last month, Home Minister P Chidambaram objected on grounds of security to the biometric data being collected by UIADAI officials. Other ministers in the cabinet are believed to have objected to the thousands of crores that Mr Nilekani wanted sanctioned for the scheme.
Congress, Opposition Members Reject Insurance, Banking And UID Bills
TIMES NEWS NETWORK -09 December 2012:
New Delhi: In a major setback to the UPA government still smarting from the FDI in multibrand retail fiasco, Congress MPs joined opposition members in Parliament’s standing committee on finance to reject three major bills relating to unique identification numbers, banking and insurance on Thursday.
The finance panel felt the UID Authority suffered from serious deficiencies over duplication of work with the registrar of census while it turned down the banking bill seeking to give investors in banks voting rights commensurate with their shares instead of the 10% cap at present. The committee felt voting rights could be increased to 26% and no further while with regard to insurance, it felt there was no case to revise the foreign investment limit from 26% to 49% as proposed by the government. There was hardly a murmur of dissent with only Congress MP Rashid Alvi suggesting the UID bill be returned to government and not rejected.
The concurrence of Congress MPs on the panel with the reports is revealing as it points to a nervousness about FDI in various sectors in the ruling party at a time when the Manmohan Singh government is keen to beat back the “policy paralysis” charge with some vigorous reforms.
However, the Congress leadership remains committed to the UID scheme, with Rahul Gandhi telling a delegation on Thursday that UID would help in funds reaching the intended beneficiaries and also check corruption.
Apart from Alvi, Congress MPs on the panel include K S Siva Rao, Sambasiva Rayapati, Magunta Reddy, Sathyanarayana Sarvey, Dharam Singh, Manicka Tagore, Anjan Yadav, Jawaharlal Darda and K V P Rao. A Left MP submitted a note demanding that voting rights of investors in bank remain at 10%. While the government has the option to reject the reports, it will find it hard to ensure passage of the bills in Rajya Sabha where the BJP and Left can come together to block the legislations. The lack of enthusiasm within the Congress will also be a source of concern for government managers looking to recover ground they lost to opposition over FDI in retail where a retreat looks like a rout.
The panel’s decisions on the important banking and insurance bills threaten to take the wind out of government’s reforms agenda. While discussing the banking bill, MPs felt the government must reconsider its proposal on giving voting rights to investors equal to their shareholding.
The MPs felt that putting a cap on voting rights at 26% would be appropriate at this juncture which can be reviewed at a later stage, sources said. The members, however, agreed to keep bank mergers outside the purview of the Competition Commission.
On the issue of UIDAI Bill, members pointed out inconsistencies in the government’s stand with several ministries raising objections on execution and finances of the project. The MPs raised objection on no singular authority mandated to enroll all citizens for the Unique ID project. While UIDAI is mandated to enroll up to 20 crore in the first phase, the registrar general has also been asked simultaneously to enroll for UID card.
POLICY PARALYSIS
Insurance Bill: Rejected Objection: No need to raise FDI cap from 26% to 49%
UIDAI Bill: Rejected Objections
UIDAI has a limited mandate to enroll up to 20 cr. Beyond that will be taken up by the registrar general
Planning Commission and finance ministry have objected to large funding required by the UIDAI
Home min is worried UID cards are security threats as they are without verification
Banking Bill: Moots cap on voting limit
Objection: There should be no change in voting pattern for a foreigner beyond 26% of his shareholding