India To End Insurance Monopoly
NEW DELHI, India (AP) _ India’s lower house of parliament approved Thursday a bill to allow foreign insurance companies to set up joint ventures, ending decades of state monopoly.
The Insurance Regulatory and Development Authority Bill allows foreign companies to hold up to 26 percent stake in joint venture companies.
Communist and socialist groups walked out of the house, saying foreign companies will muscle out Indian companies and take away profits from the country. They fear that many workers of the government’s two insurance companies will become unemployed following increased competition.
The bill now goes to the upper house for ratification. The main Congress party agreed to support the bill there after the government agreed to changes suggested by it.
The government said foreign firms must invest in the infrastructure sector and provide cheap insurance policies to poor people. Companies entering the health insurance segment will get priority licenses.
Most of the 200,000 employees of India’s two government-owned insurance companies went on strike Monday against the proposed bill.
In the debate leading up to passage of the bill, Finance Minister Yashwant Sinha said the government has no plans to sell stakes in these companies.