NEW DELHI, Oct 4: Economic reforms in India received a further push on Thursday, with the cabinet approving legislative changes that will allow up to 49 per cent foreign equity in pension sector and hike such limit in insurance to 49 per cent from 26 per cent.
The cabinet meeting, presided over by Prime Minister Manmohan Singh, also approved other long-pending measures such as crucial changes in the Companies Act, and giving greater autonomy to the regulator to introduce more commodities and options for futures trading.
Keeping the momentum going on fresh doses of economic liberalization measures being administered since last month, the United Progressive Alliance (UPA) government cleared 21 proposals on Thursday, with the Prime Minister leaving little room for debate.
The decisions, announced by Finance Minister P. Chidambaram, included designating five domestic airports for overseas operations, bringing all the financial services under the Competition Commission and revamp of employment exchanges.
The cabinet also cleared the draft 12th Five Year Plan document (2012-13 to 2016-17), which targets an economic growth of 8.2 percent. This will now go to the National Development Council for adoption. Also cleared was a fund for infrastructure.
Unlike the decisions on retail, aviation and broadcasting, the approvals on insurance, pension and forward contracts in commodities need the Parliament’s approval and could face rough weather from the opposition, especially the Bharatiya Janata Party (BJP).
The Parliamentary Standing Committee on Finance, headed by BJP’s Yashwant Sinha, had recommended foreign equity in insurance sector be capped at 26 per cent, but was okay with the opening of pension business with a 26 per cent foreign equity cap. “The foreign equity limit in pension sector will follow the insurance sector. If in the insurance sector the cap is 49 per cent, then in pension too the cap will be 49 per cent,” Chidambaram said.
The decisions on these two sectors is expected to go a long way in helping the domestic companies shore up their capital base, and also introduce new products and schemes that suit individual needs. IANS