entire winter session was lost with the government not agreeing to it, and then they finally conceded it. The government is also not clear on what it wants—it can’t keep changing the goalpost. The government can’t give an undertaking in Parliament promising consensus before moving on FDI in retail, and then notify this without a consensus.
We’ll come to that in a minute, but effectively we’re back to where we started. You won’t allow either pension or insurance FDI to be raised to 49%…
Let’s get some facts right. For one, the Standing Committee is not just the BJP or I; the UPA has more members in it than the Opposition has, so it is incorrect to say the BJP is not allowing the bills to go through. Two, my original insurance bill had 26% FDI and another 23% for FII/Overseas Corporate Bodies (OCBs), etc. It was the same Congress that didn’t want anything more than 26%.
Two questions. First, are you open to allowing 23% for FIIs/OCBs, etc? Two, how are firms to find the capital to grow if you don’t allow 49% FDI?
The government can come to the Standing Committee with this; it hasn’t so far. That’s when we will decide.
But will you clear it?
I cannot answer a hypothetical question from the media. Let the government ask the Standing Committee.
And the funds?
We had detailed discussions with the IRDA and no one was able to show us why we needed 49% FDI. The bill, as it stands, commits to Indian promoters diluting to 26% after 10 years, so firms can get funds from the market if they need to. In any case, as far as Indian company law is concerned, there is no difference between 26% and 49% as far as control is concerned. So the only issue is of ability to raise funds, and no one has been able to convince the Standing Committee that increased FDI is the only way out.
You’ve said somewhere that after the global financial crisis, everyone is looking at financial sector reforms differently.
But shouldn’t this apply to, say, complex derivatives that few understand, and not to insurance and pensions where, in any case, if the regulator doesn’t do a good job, even 100% Indian firms can get away with fraud.
You can’t keep regulating everything and assume all fraud will get caught. We still have banking and stock market frauds despite good regulators in both areas.