The UPA government is set for a second push for Prime Minister Manmohan Singh’s reform measures. The Cabinet is expected to clear 26 per cent FDI in pensions and 46 per cent in insurance on Thursday. Currently, no foreign investment is allowed in the pension sector and only 26 per cent FDI is allowed in insurance.
The move on FDI in pension will need Parliamentary ratification as insurance is governed by an act of law and is not an executive domain. The Cabinet is also likely to approve the Pharma pricing policy, despite drug experts alleging that there are major loopholes in the pricing of drugs. This reform is expected to make pricing more consumer friendly, but perhaps not in the long run.
The Cabinet will also consider the Forward Contract Regulation Act (Amendment) Bill to empower commodity markets regulator FMC with greater financial autonomy, facilitate the entry of institutional investors and introduce new products for trading such as options and indices. It will also take up the Companies Bill to bring all sectors under the Companies Act, amendment to the Competition Act and a proposal for operationalising the Infrastructure Development Fund (IDF), sources said.
A proposal to set up a National Investment Board (NIB), to be headed by Prime Minister Manmohan Singh, for according fast-track clearances to infrastructure projects will also be taken up at the meeting, they said. The government intends to sent out a strong signal to foreign invetsors and to the domestic constituencies that it is very serious about reforms. But the UPA may not be able to muster numbers to get a legislative backing that is necessary.
This is the second wave of reforms decisions to be undertaken by the government within a month. On September 13, the government had approved the decision of allowing 51 per cent FDI in multi-brand retail, besides relaxing FDI norms for civil aviation and broadcasting sector. The decision on FDI in retail triggered a major uproar, with some allies and opposition parties launching a massive attack on the government. Trinamool Congress even withdrew support to the government. The Cabinet is also expected to approve 12th Plan and accord international status to five airports.