The government expects to be able to steer the insurance Bill through Parliament in the winter session.
“Most parties, including the principal opposition have assured me of their support to it,” Finance Minister P Chidambaram told reporters on Friday. He added that the government hoped to pass as many as 12 legislative Bills in the session, which would be the last full session before the 2014 Lok Sabha elections.
Chidambaram also expressed confidence that the worst may be over for the Indian economy. The current account deficit for FY 14 is expected to be pegged below $ 60 billion, and the fiscal deficit is expected to be contained within 4.8 per cent of the GDP.
The minister made these comments after the stock markets closed at a lifetime high on Friday. The Bombay Stock Exchange Sensex touched 21,293.88 in intra-day trade before closing at 21,196.81.
“The markets seem to be very happy. They seem to welcome the RBI and government measures. But I would caution investors against excessive exuberance,” Chidambaram said.
The minister said the Reserve Bank’s decision to raise the short-term lending (repo) rate by 0.5 per cent in two installments was right. RBI Governor Raghuram Rajan’s steps needed to be “understood in the context of high inflation and stabilization of the depreciating currency. The RBI has reversed the tight liquidity conditions and MSF hike in two successive policies and we are now returning to a normal policy”, he said.
These were Chidambaram’s first comments after the RBI raised rates.
The insurance Bill which seeks to raise the foreign direct investment ceiling in the insurance sector to 49 per cent has been with the Rajya Sabha since 2008. The Cabinet had approved it again in October 2012.
The standing committee on Finance had, however, suggested that the cap should be kept at 26 per cent. The government is now understood to be considering a proposal to raise the FDI cap to 49 per cent without an increase in voting rights. Passage of the Bill is expected to bring additional capital for the insurance sector, and help India finalize free trade pacts with the European Union.
On the Direct Taxes Code Bill, Chidambaram said fresh amendments have to be placed before the Cabinet for approval, which will also decide when it would be tabled in Parliament.
“I have to move a supplementary note (on the Code) to the Cabinet and it is up to the