India opposition “open minded” on plans to open pension, insurance sectors

By Reuters Staff
April 9, 2010

By Bappa Majumdar

NEW DELHI, April 9 (Reuters) – India’s main opposition party will not block government plans to open the insurance and pension sectors to foreign investments if it helps the people, but opposes a nuclear liability bill, its leader said on Friday.

Prime Minister Manmohan Singh’s coalition government wants to open up the insurance sector by raising the limit on foreign direct investment to 49 percent from the present 26 percent.

The government also wants to allow foreign funds to hold a maximum 26 percent in joint ventures with Indian firms in the pension sector.

The finance ministry has also proposed revising FDI norms in the pension sector in line with norms in the insurance sector.

The government has postponed placing these bills in parliament until it is sure about a consensus from its allies and main opposition parties after facing huge protests in the past.

“Any policies which are going to strengthen our country…BJP is open minded,” Nitin Gadkari, President of the Hindu-nationalist Bharatiya Janata Party (BJP) said, when asked about the party’s stand on the bills to open the lucrative sectors to foreign investment.

“We are ready to discuss and we will support all these issues,” Gadkari said in an interview, adding that much depended on the provisions of the bills.

The BJP rose to prominence in the early 1990s on the back of a Hindu revivalist movement and ruled from 1998 to 2004, promoting economic reforms and gaining a reputation as pro-business.

PARTY LOSES TWO STRAIGHT ELECTIONS

It lost to the Congress Party in two straight elections in 2004 and 2009. Experts said it had paid too little attention to rural constituencies and concentrated on development in cities.

Gadkari, appointed party chief last December to rejuvenate the BJP ahead of eight state elections, attacked the Congress Party over its failure to tame inflation. That, he said, would hurt his opponents in future elections.

India’s food prices accelerated for the second straight week in late-March, strengthening expectations of a hike in key policy rates when the central bank reviews its policy on April 20.

“Inflation is a problem. it is related with wrong economic policies and bad governance of the Congress Party,” Gadkari said.

But Gadkari said his party would oppose the nuclear liability bill if the government introduces it to parliament this month, a move that could further delay entry of U.S. firms into the country’s $150 billion nuclear market. [ID:nSGE63006V]

A 2008 deal with the United States ended the nuclear isolation into which India was thrust by its 1974 atomic test. It also gave India access to U.S. technology and fuel, while also opening up the global nuclear market to India.

BJP says the bill favours private players as it seeks to put a maximum liability of about $450 million on the state-run reactor operator without placing any compensation burden on private suppliers and contractors.

“We have some reservations about it… I never understand why liability for India is different and for USA is different,” Gadkari said. (Editing by Abhijit Neogy and Ron Popeski) ((bappa.majumdar@thomsonreuters.com; Reuters Messaging: bappa.majumdar.reuters.com@reuters.net, +91-11-41781003)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))

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