ON THE INSURANCE LAWS (AMENDMENT) BILL, 2015
TAPAN KUMAR SEN:
Mr. Deputy Chairman, Sir, I beg your indulgence in the matter of time to present my views on this Bill. I stand to oppose this Bill in totality. I demand that the House must scrap this. This is a Bill, which, at every stage, will hit the basic interests of the nation. Hon. Finance Minister, while presenting the Bill, said that this Bill aims at bigger insurance penetration, bigger coverage of health insurance, etcetra, etcetra to cover all the people.
I have a different definition of the aims and objectives of the Bill. This Bill, basically, aims at: hiking the FDI cap and paving the way for gradual privatization of the public sector insurance companies. These are the basic twin objectives with which the Bill was formulated. There are many other provisions also, which are not in the interest of the nation.
Let us first take up the issue of the FDI cap. By raising the FDI cap, you are trying to have a bigger foreign partner in the Indian insurance companies. Who are the players and who are going to come here? Most of the insurance giants in the USA and Europe are already in partnership with a private insurance company, around 14-odd private insurance companies are there, operating in the Indian soil. What is their contribution in expanding the insurance coverage since the time they were allowed to enter into the Indian insurance market?
Very effectively, Ram Gopalji has pointed out, the more the FDI is increasing, the more the dominance of even the private insurance companies is growing, the insurance penetration is going down. Because all these private companies with foreign partnership are, basically, operating in the cities and the peripheral areas on the creamy layer, they don’t go to the cities and the villages to cover poor people out of their insurance cover. This is a real fact. Wherever they go— two and three cases are there— they have gone for the crop insurance, weather insurance and all other cases — these are all matters of record with the Finance Ministry also — they have made a scam. In some cases the scam could not be suppressed because we raised those issues, sent letters after letters, and, ultimately, the Government had to take action in getting back the money that was given to them from the Government kitty as a part of the premium for the BPL households.
In Rajasthan Weather based Crop Insurance Scheme, they have to pay back the money. Wherever they have touched, in the public domain of poor people’s insurance, they made a scam. That is why that explains the more your FDI is increasing, the more your FDI penetration is going down. Earlier, it was 5 per cent and at this moment, it is 3.1 per cent. With 49 per cent, definitely, it will come below one per cent if the public sector insurance company takes a counterveiling expansionary step to cover it up. This is the story of insurance penetration. Because of their role, of the public sector insurance companies, today the Indian insurance penetration is 3.1 per cent. It favourably converges, when we compare it, with the insurance penetration of the USA, which is also 3.1 per cent.
With 100 per cent FDI coverage, as my friend, Dr. Chandan Mitra, said, the US’s insurance penetration is 3.1 per cent and India’s insurance penetration is 3.17 per cent. Why is it, Sir? Why is this exercise? Insurance is a business for which capital does not come from abroad. Insurance is a business whose main capital is the premium or savings, premium-related savings contributed by the consumers, by the clients. ...(Time-bell)...
THE VICE-CHAIRMAN (SHRI V.P. SINGH BADNORE): Two minutes more.
SHRI TAPAN KUMAR SEN: No, Sir. Sorry. We, from the very beginning, have protested against this unilateral exercise. This Bill cannot have two hours. You must allow me to place all my points. Sorry. And this was agreed to also. This was agreed to in the morning also. You can’t do it.
THE VICE-CHAIRMAN (SHRI V.P. SINGH BADNORE): But you can’t go on and on.
SHRI TAPAN KUMAR SEN: No, no. You must allow me to place my points. Otherwise, I will sit down here itself. ...(Interruptions)...
THE VICE-CHAIRMAN (SHRI V.P. SINGH BADNORE): How many more minutes do you want?
SHRI TAPAN KUMAR SEN: I must complete my points. You must allow me.
SHRI T.K. RANGARAJAN: Sir, let the Government hear the opponents’ views also.
THE VICE-CHAIRMAN (SHRI V.P. SINGH BADNORE): Okay. You have four minutes. I will give you double that time; nothing more than that.
SHRI TAPAN KUMAR SEN: No, Sir. I must complete my points.
THE VICE-CHAIRMAN (SHRI V.P. SINGH BADNORE): Please carry on. Carry on. ...(Interruptions)...
SHRI TAPAN KUMAR SEN: Two minutes have already gone.
THE VICE-CHAIRMAN (SHRI V.P. SINGH BADNORE): I cannot do what, as per procedure, is not possible. ...(Interruptions)...
SHRI TAPAN KUMAR SEN: So, Sir, my second point is, who are these people? They are all bankrupts in their countries. All are bankrupts in their countries, surviving out of the Government’s exchequer, bail-out given by the Government, and this 49 per cent hike is an additional bail-out being given by the poor Government of India’s exchequer. It is an additional bail-out to those bankrupt companies. So, they will come here, collect the Indian people’s savings out of insurance and have their own business. You are giving them an additional bail-out at the cost of poor Indian consumers. This is not in national interest, and, to facilitate that purpose, what have you done? For security coverage, earlier there is a provision that any assets outside India will not be taken into account to consider their net worth. There was a provision in the existing law. Even that provision was also deleted. ...(Time-bell)... Sir, subservience to outside interest can go to such an extent that an anti-national provision is made in the Bill that a foreign company’s net worth will be calculated on the basis of a property outside! But if the company fails, you can’t attach that property outside. This time you have deliberately deleted that provision, that restriction, and allowed the outside property also to be computed as a part of those. Sir, what benefit will we get out of it? What benefit the country will get out of it? The second aspect of this Bill is, you are opening the door of privatization to General Insurance Corporation. You are allowing disinvestment there to collect resources. ...(Time-bell)... Please. With all respect to Chair, please allow me.
SHRI P. RAJEEVE: Sir, there was an understanding in the morning. The Parliamentary Affairs Minister is here. ...(Interruptions)...
\THE VICE-CHAIRMAN (SHRI V.P. SINGH BADNORE): You had four minutes. I am giving you double the time. I can’t do more than that. ...(Interruptions)...
SHRI P. RAJEEVE: There is an understanding. The Minister is here. ...(Interruptions)...
THE VICE-CHAIRMAN (SHRI V.P. SINGH BADNORE): I am giving you double the time.
SHRI TAPAN KUMAR SEN: Number three, you are allowing disinvestment of the shares of GIC. No problem. ...(Interruptions)...
THE VICE-CHAIRMAN (SHRI V.P. SINGH BADNORE): Thank you very much. ...(Interruptions)... Take two more minutes. ...((Interruptions)... But it can’t be open-ended. It can’t be openended.
SHRI TAPAN KUMAR SEN: You are going to do disinvestment in GIC. Do they need money and what is the logic? In order to raise resources from the market, they have to go for selling their equity. There are ‘n’ number of ways of raising resources from the market. Why is this equity dilution? It is because you have to allow private sector participation in their Board of Directors to infringe on their right of smoothly running the company. You kindly check, hon. Finance Minister, the huge reserves the GIC is having and the credibility of the GIC in the market, of the financial institution or, for that matter, the credibility of the entire public sector companies in the country. Their debt equity ratio is less than 5.5 or 5.7.
Their credibility in the credit market, bank market, is very big. They don’t have any dearth of resources if they wish to collect from the market. They don’t have to dilute their equity or their ownership quality. You are doing it to open the doors of privatization. That is the basic philosophy. Thirdly, for efficiency...
THE VICE-CHAIRMAN (SHRI V. P. SINGH BADNORE): Thank you. You are speaking very well, but I can’t help it. You have to conclude.
SHRI TAPAN KUMAR SEN: Sir, I was ready to sit, but you said I can speak and that is why I continued speaking.
THE VICE-CHAIRMAN (SHRI V. P. SINGH BADNORE): Okay. Take half a minute more.
SHRI TAPAN KUMAR SEN: Sir, coming to the question of efficiency, does it anywhere compare our private insurance companies with foreign partners? The AIG, Fortis, etc., are already operating in our country. You compare the efficiency. One per cent is the rejection rate of LIC — just one per cent — whereas in all private insurance companies the rejection rate is 20 to 33 per cent. The percentage of policies getting lapsed is 47. What does it mean when policies lapse? Poor people! With an aggressive marketing strategy, through multi-layer marketing, called ponzi, they collect money. In most of the private insurance companies, more than 60 per cent of their businesses are collected through ponzi. Because of their aggressive marketing, people purchase policies, but thereafter, they are unable to continue. These policies then lapse and the whole money goes into the kitty of the private company.
THE VICE-CHAIRMAN (SHRI V. P. SINGH BADNORE): Thank you. Shri Dilip Tirkey.
SHRI TAPAN KUMAR SEN: So, this is the kind of ‘efficiency’ we are projecting and for making it more ‘efficient’, they are inviting foreign investors and they are privatizing the whole insurance sector. Sir, this is not in the interest of the country. This is not in the interest of the financial economy. I urge upon the Government to kindly re-consider this Bill and request them not to get confused with the LIC Chairman’s statement. On 9th March, the employees of LIC and GIC, represented by all Unions, right, left and centre — even your Union was there — had gone on a 100 per cent strike to protest against this. You may pass the Bill, but thereafter, during the implementation stage, there would be resistance at the workplaces. As a trade unionist, I would like to issue this warning to the Government — please don’t go in that direction. I urge upon the Government to scrap this Bill, to withdraw this Bill. With this request, I conclude my speech. Thank you. (Ends)
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