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August 23, 1997 |
'Economic reforms divorced from a larger concept of a moral universe and a national impulse will dilute our sovereignty'
Last fortnight, the I K .Gujral government faced a major embarrassment when it was forced to withdraw the Insurance Regulatory Authority Bill in Parliament after realising that it was sure
to fall through. This was not only a setback for the UF government,
as a whole, but for Finance Minister PChidambaram, in particular,
who had set great store by the passage of the Bill.
Clearly the government had miscalculated the support for the Bill
in the House. And one possible reason why it was misled was the
Bharatiya Janata Party's refusal to back the Bill even after giving the impression
earlier that it was ready to go along.
Did the BJP really change its mind at the last moment?
Did you, or, in your knowledge, anyone else give any assurance
to the finance minister that the IRA Bill would be supported?
The finance minister certainly spoke to me about
certain amendments moved by two or three BJP members. I explained
the BJP's position -- which I repeated in Parliament -- as stated
in its election manifesto.
Firstly, we advocate an opening up to Indian entrepreneurs. Secondly,
we do not favour the entry of multinationals in the field. Transnational
insurance companies with much greater financial clout would prevent
the growth of a vibrant indigenous Indian insurance industry.
And, so far as an IRA is concerned, we believe that a multi-member
body is needed. When I enunciated all this, the finance minister
had no difficulties and said he'd be satisfying the House in regard
to foreign participation in this sector. This conversation certainly
took place.
What was sought was an assurance that there was no intention to
permit entry of transnational corporations in this sector under
the guise of the IRA Bill.
Did he take what you said to him to be an assurance?
It will be difficult for me to say what the finance minister
assumed. To be fair to him, I will say that discussion on the
Bill followed a comprehensive discussion in the standing committee
where all parties are represented. All parties had given the go-ahead
except the CPI-M's (pauses)...
...Biplab Dasgupta, who gave a dissent note.
Yes, it is therefore for the finance minister to draw such
conclusions as he did.
Without being unfair, I do not think legislation in Parliament
and its enactment is the responsibility of any single minister.
It is the government of the day that brings forward the legislation.
A minister simply pilots it.
And, it is not for anyone in government to point out that a failure
to steer safely the passage of a Bill through parliamentary passions is that of the Opposition, which suggestion is disingenuous, to say the least. I think the BJP continued to play its role as the
Opposition with caution, with restraint and with responsibility.
In any case, this government is an artificial construct sustained
in office by the wholly questionable device of support from outside.
In the standing committee of Parliament, there was no opposition
of the Bill by the BJP.
This aspect of foreign intervention was raised by the BJP and
it was answered to their satisfaction. But you must understand
that committees are an aid to deliberations on the floor of the
House. They are not an alternative or a replacement. The role,
duties, functions of Parliament are facilitated, not pre-shortened,
by a committee.
Are you personally opposed to foreign capital?
As a party functionary my views become subservient to party
views. In its election manifesto of 1996, the BJP has stated its
preference for (a) long-term capital in (b) high-tech areas.
If we improve our regulatory mechanism and the financial services
sector, we can absorb more capital than has been presently demonstrated.
But you have just killed one regulatory Bill. And usually insurance
and pension funds come as long-term capital.
When you talk of long-term capital, you have to examine the
role of insurance. Banking is natural to India. Insurance is not.
Only 5.6 million out of a population of 900 million -- or less than .5
per cent -- have life insurance because of the inefficiency of
LIC and also due to cultural resistance to insurance.
Foreign insurance companies with more investable resources are
looking at that enormous market of 900 million. If even a third of
this population is covered, look at the enormous benefits that
would accrue.
These benefits must not go out of India. At a coverage 0.5 per
cent, LIC sits on a treasure store of nearly Rs 500 billion which
is not efficiently utilised. Imagine the treasure if 30 per cent
of India were covered.
The cultural and institutional resistance can be broken by breaking
the State monopoly. Indian entrepreneurs should be allowed in.
But foreign money...? No.
You are one of the few liberalisers left in your party which
is increasingly becoming swadeshi. Are you an endangered species?
I do not think so. Economic reforms divorced from a larger
concept of a moral universe and a national impulse will dilute
our sovereignty. Swadeshi in essence is a voice against precisely
such blurring of lines of economic sovereignty.
It would also be a great error to think that unalloyed capitalism
is an answer for a nation like India. We might or might not be
a poor country but we are a country of the poor. At least 350
million people cannot feed themselves. The fashionable words of
today -- globalisation, market forces, etc -- do not mean, in
the Indian context, an abolition of the State. What the nature
of that State ought to be and whether the Indian state has the
required attributes are different inquiries.
Kind courtesy: Sunday magazine
EARLIER REPORTS:
Blow to reforms as insurance bill is withdrawn
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