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Business Commentary / Jay Dubashi

Insurance reforms won't be easy

Things are hotting up on the foreign investment front, particularly the insurance side. The Atal Bihari Vajpayee government insists it will go ahead with its insurance bill. In other words, setting up of the Insurance Regulation Authority, with a provision for foreign equity up to 40 per cent, though there was no such provision in either its manifesto or the national agenda.

Until yesterday, only the Rashtriya Swayamsevak Sangh, through its Swadeshi Jagaran Manch, seemed to be opposing the move. But, going by an interview given by Bharatiya Janata Party president Kushabhau Thakre to a weekly, even the BJP opposes the entry of foreign multinationals into the insurance sector.

Thakre says the matter was never discussed with the party whose views cannot be dismissed lightly.

Indications are that the government will go through the bill in Parliament and may even secure the support of parties like the Congress to push it through. But its implementation will not be easy.

Most trade unions, including the BJP's own trade union, the Bharatiya Mazdoor Sangh, are opposed to the bill. In fact, the BMS staged a demonstration in front of Parliament in which its leaders vowed that they would never allow the bill to go through. The founder of BMS, India's largest trade union, Dattopant Thengdi, happens to be an RSS pracharak, just like Vajpayee and Thakre.

The question is not whether the bill will go through or not, but why there is so much opposition to it, even from the BJP's own friends in the Sangh Parivar? The first objection is that none of the allies were consulted about the bill, which, if true, is a serious matter.

Secondly, the government itself is supposed to have assured Parliament that no foreign equity would be allowed. Why then is the government going ahead with the bill?

The government seems to have isolated itself on this issue. The prime minister's advisers on economic issues are drawn from outside the RSS circles. This may be a deliberate move, since Vajpayee himself is supposed to be a liberal in economic -- and possibly other -- matters and does not take swadeshi business seriously.

His council of economic advisers is also drawn almost exclusively from economists who have never been very friendly to the RSS or swadeshi, and some of them actually in spite of the two organisations. Why the prime minister should have gone out of his way to select such individuals is something of a mystery.

In my view, the PM's advisers have misjudged the strength of opponents of the insurance bill. They are essentially government men, and have no idea or experience of how decisions are taken in political parties. They probably think the government is more important than the party, and the party itself more important than the Sangh Parivar from which it draws its strength. It is this miscalculation that is responsible for the furore over the bill.

The prime minister and his colleagues should have held discussions with the party colleagues as also with the trade unions and thrash out the issue. It is possible he would have been successful in removing their doubts about the bill and the entry of foreigners in the insurance industry. It is surprising that the government did not take even the party president into confidence. This is an unpardonable step, in a parliamentary democracy where it is parties which form governments, not individuals.

A foreigner once told me it was only in India that there was so much resistance to foreign investment. I am glad that this is so. When there is so much resistance, there must be some reasons for it, good or bad. And even when foreigners know there is resistance, it does not seem proper on the part of the government, any government, to ride roughshod over the opposition, and ignore it totally.

Now, there is visible confrontation between the government on one side and almost everybody else on the other. It is not clear why the government is so keen to push through its programme in the face of this type of opposition. And even if the bill goes through, there will always be a question mark over its implementation, for in a country like India, there is a limit to what you can do if you do not have the people with you, particularly your own people who have put you in power.

Jay Dubashi

Business News