New Delhi: With the insurance bill aimed at raising the FDI cap from 26 to 49 per cent listed in Parliament's agenda, CPI(M) on Thursday said that it was a "welcome gift" from the Narendra Modi government to visiting US Secretary of State John Kerry. "The Modi government has extended a welcome gift to John Kerry, the US Secretary of State, who is visiting India.... This will fulfill a longstanding demand of the United States, as voiced repeatedly by the India-US business forum which was set-up during the UPA-1 government," senior party leader Sitaram Yechury said.
Noting that the Standing Committee on Finance chaired by BJP leader Yashwant Sinha had recommended that the cap need not be raised, he said "now the Modi government has brought its first substantive legislative measure" in Parliament to increase the cap to 49 per cent.
"This signifies its eagerness to appease international finance capital and its commitment to pursue neo-liberal policies. Congress which had wanted this bill in the first place will have no hesitation in supporting this measure in Parliament. It is a case of tweedledum and tweedledee," he said in an editorial in the next issue of CPI(M) organ 'People's Democracy'.
Countering the "well-worn arguments" for more FDI in insurance, he said while there is "no dearth of domestic capital" for this sector, the record of the foreign insurance companies "do not inspire any confidence" so far as financial stability and proper coverage were concerned.
Referring to the "dodgy practices" of American insurance firms to maximise profit, Yechury said that the 2008 global financial crisis "starkly exposed the vulnerability of the financial sector in the US and how the people were defrauded by these companies.
"The AIG, the biggest insurance company, was on the verge of collapse and had to be bailed out by the US government at a huge cost." Maintaining that LIC while competing against private players has got 74 per cent of the market share, the CPI(M) leader said the state-run company was contributing huge amounts as dividend to the government and investing ample funds in government-directed development.
"Privatisation of the insurance and pension funds and putting them into the market is meant to enrich and profit the big financial and corporate interests at the expense of funds which are at the disposal of the government for development and welfare of the people," he said.
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