SHRI TARIT BARAN TOPDAR : Is there any guarantee in the Bill that the foreign companies will take care of the unorganised sector in the country? ...(Interruptions)

DR. NITISH SENGUPTA : You will have a chance to speak.

Sir, therefore, I would strongly support the Bill. As I went through the Bill I have felt the need for some minor changes in the Bill like, for instance, when you talk about insuring any applicant, you say of a quality company. When you talk about employment and about persons who will be employed as members of the insurance authority, you have given so many things like accountancy, administration etc You also try to add one more subject like business management or something. Today many management experts are there. ...(Interruptions) No, not for me. I have passed that age and I am not worried about that.

But the point is that there are some other little points here and there which, perhaps, I will come to when the Clause by Clause Consideration takes place. For the present I am ending here with my full-throated and complete support of the Bill as it is.

My Congress friends gave me some suggestions. I have not had time to go through them. But I can promise that I will go through some of the suggestions. I did appreciate Shri Rajesh Pilot's approach and speech very much. About the amendments I will go through them and raise them when the right time comes.


17.17 hrs.

SHRI K. MALAISAMY (RAMANATHAPURAM): Hon. Speaker Sir, thank you very much for the opportunity given to me to make my presentation on this subject on behalf of the AIADMK which is functioning under the able and stable leadership of Dr. Jayalalitha, who is a mass leader, a magnificent leader, a marvellous leader, a field leader, a fearless leader and a famous leader. ....(Interruptions) It is our leader who, among a few personalities of the country, has come forward to oppose the Bill with millions and billions of people, and in conformity with her guideline and her views, let me make my submissions and divulge and dilate a little further.

In fact, I am constrained and compelled to be a little critical for more than one reasons towards the Treasury Benches which has introduced this most unpopular Bill with undue haste, with hidden purpose and with untold agenda. I may hasten to join with my colleagues in this House who have opposed the Bill. As far as I am concerned, this is one of the most controversial and sensational Bills in the annals of this House in terms of public reaction by way of opposition to the Bill in writing by 1.5 crore people, by way of numerous demonstrations, protests, processions and other means to oppose this Bill and by way of discussions, debates and disputing the Bill through Press and media.

In spite of all these things, unmindful of the public reactions, the Government seem to be very keen in passing the Bill.

Coming to the Bill, I am able to see two major objectives; I can divide the objectives into two parts. One is to regulate, promote, protect, enable or to ensure the smooth growth of the insurance industry. As far as this objective is concerned, none will have any objection; it is most welcome.

Coming to the second part of the objective, namely, to enable the entry of private companies, both from foreign as well inland, and destroying or removing the monopoly or the exclusive privilege enjoyed by the nationalised companies, I could see that the sponsors or the promoters of the Bill expect a huge flow of money from foreign countries as well as inland on the one side. They expect a huge business penetration in the insurance sector and also better services and better products in the market. These are all the major points or the merits or advantages advanced on behalf of privatisation.

Out of these three or four advantages, the real advantage which the Government is very keen to derive is the flow of money from outside. In respect of others by making structural changes, by making some changes here and there and in the system by efficient personnel management etc., the business can be improved or the system can be improved, and new products can be introduced. All these things could be possible. As such the core or the real or the main reason behind going for privatisation seems to be that they are in need of money. They want to get a huge inflow from outside. As far as I could see and I am given to understand from the Press and other materials, including the number of statements made by our hon. Finance Minister, that the country is in great peril, in terms of financial crunch or financial crisis. On account of financial indiscipline, on the one side and inefficient financial management on the other, the country is in doldrums, as far as the financial aspect is concerned.

It may not be out of place to touch upon some of the reasons for the financial crisis. There is a sharp decline in the annual growth rate; there is a high non-Plan expenditure, while there is a gradual decline in the Plan expenditure; the revenue receipts have come down, and the fiscal deficit has gone up because of subsidies, populist measures and unproductive expenditure; the

Fiscal deficit for the first time has touched six digits, exceeding more than rupees one crore; internal liability and external debt have gone up to Rs. 3.5 lakh crore amounting to 58.8 per cent of GDP resulting a huge outflow by way of interest alone. This liability would still go up in the next Budget. It is again seen that 57 per cent of the Budgeted expenditure for this year has been spent in the first five months itself. This, of course, exclusive of Kargil expenditure. If such things continued, then there would be a record deficit. This is not only the position of the Central Government but also that of the State Governments. Many of the State Governments are on the brink of bankruptcy.

Sir, under these circumstances the States in general and the country as a whole are in dire need of funds. We agree that there is a need for it. If globalisation, liberalisation or privatisation is the way out to this crisis, - having been a former bureaucrat for the last so many years and having seen the system of the Government and how the Governments function -- I would not object to the initiation of any economic reforms or for taking any appropriate measures which would lead to the improvement and upliftment of the financial position of the country.

While considering the wayout and measures, one should be extremely careful, selective and elective as well. Instead of choosing a right course the Government has chosen the wrong course by means of privatisation. They could have chosen so many other areas. There are umpteen number of Government undertakings, Government companies and institutions which might have been in need of assistance in terms of foreign capital.

We have seen that there are several sick undertakings and companies which need such kind of revival packages. Instead of doing that the Government has now chosen the wrong line of going for privatisation. As our leader Puratchi Thalaivi has said, this is more like killing a goose at one stroke which has been laying golden eggs everyday. What I mean is that the LIC and the GIC have been performing exceeding well. Our friends here have already said in so many words giving eleborate details with facts and figures high lighting their performance and achievements the performances of the LIC and the GIC are really excellent. In terms of providing insurance cover, settlement of claims, return on investment, Budgetary support.As such it is time that the LIC and the GIC have done exceedingly well. It is also seen that the growth level and claim settlement is much higher than the international experience. Even the WTO agreement has not covered this area. As such there is no compulsion from W.T.O. to go for privatisation.

It is to be noted that speaking from post experience of our country with other foreign nations the expected capital outflow has fallen. In 1997 it was 3.35 billion dollars, in 1998 it had come down to 2.28 billion dollars. Again, there is a big gap in regard to FDI also. The approved FDI was 308 billion dollars but actually obtained was 133 billion dollars. As such, what I am trying to point out is that the hon. Members from the Treasury Benches cannot afford to be sure of ahuge flow of money from outside under this scheme as proposed. The earlier experience has shown that there is a sea of difference and a very big gap between what is expected and what is actually achieved. Not only that, in foreign countries, insurance business to outsiders has been restricted to three to five per cent only and not 26/- as proposed here.

We do not understand why 26 per cent participation is being allowed for foreign companies. The Government says that multinational companies will enter this field subject to certain safeguards and conditions. But, by virtue of their money power and their influence through international organisations like IMF, World Bank and WTO, they could succeed to become a monopoly in this sector by driving out all domestic companies out of business. A scenario may develop in which, instead of the domestic companies being a monopoly as is the case now, foreign companies may come to hold the monopoly in the industry. Though the Government say that they are going to ensure safeguards to protect the interest of domestic insurance industry, in practice it is not likely to happen.

In practice, it may not be possible to achieve the objective of the proposal through this measure of privatisation. This is what our past experience has shown. We have seen Governments regretting for having taken decisions of this nature in the past. Instead of going in for privatisation of insurance, industry to get more the flow of capital, Government should concentrate on the inherent strength and unexploited potentiality of the country. For example, India has a tremendous potentialities in terms of vast domestic market which is yet to be exploited. We have a lot of cheap manpower which has not been exploited fully. We have a well-defined system of governance and a time tested democratic system over the past 52 years. There are vast area of unexploited natural resources. By taking advantage of these, the Government can do a lot without touching the sensitive areas like privatisation of insurance. As such the Govt. can explore and exploit the said areas with in our country for the growth and development of infrastructure.

In this connection may I make a mention of some relevent areas to be exploited. We have been talking for decades together about the Setusamudram project which is expected to bring in economic transformation to the Southern districts of Tamil Nadu. It is yet to take a concrete steps. The eastern coastal area touching Ramanathapuram constituency. It has a great potential for sea wealth. Why cannot such projects be taken up by the Government and develop for the upliftment and growth of such most backward areas? There are a number of minor ports potential like Tondi, Rameswaram, Mookkaiyur, Valinokkam, etc., which can be developed and which would contribute to the economic growth of the country. Broad Gauge conversion of railway line from Tiruchy to Rameswaram has great economic potential. Presently the broad gauge conversion is sanctioned up to Manamadurai only. It requires to be done up to Rameswaram. There are umpteen number of such projects which would contribute handsomely to the economic development of the country. This would help for the creation of assets and infrastructure facilities besides ensuring inflow of money. The Government, instead of disturbing the sensitive areas L.I.C. & G.I.C. which would affect the interest of millions of people, should concentrate on areas which I mentioned for development country. Under these circumstances, let me reiterate my stand of opposing tbe Bill and the Bill may either be withheld or dropped once for all.

SHRI ADHI SANKAR (CUDDALORE): Mr. Speaker, Sir, I am thankful to you for giving me the opportunity to speak on this Bill. I rise to support this Bill on behalf of my party the DMK.

The Bill in question has created a furore in the country apart from generating a lot of political propaganda. However, one should keep in mind that this Bill, when it comes into effect, will not immediately lead to privatisation of insurance. It will only pave the way in that direction.

Governments keeping a tight hold on certain industries would only result in a lack of responsibility on the part of people and lack of healthy competition in those industries.

At the same time, it should demarcate the sectors which are to be privatised on the basis of the nature, profit, achievement and service to the society. In the case of Insurance Sector, healthy competition is a must for its growth.

Further, competition can ensure awareness of the benefits of Insurance, timely payment of the premium, immediate release of loan and timely disposal of the matured amount.

As per the present Bill, private organisations cannot act on their own. The Bill makes it clear that conditions like benefits to the society, needs of the villages and some conditions on investments or deposits would be imposed. Hence, the chances of an economic gamble on the entering of the private organisations in this arena are very remote.

Even during the regime of the United Front Government, this Bill was presented before the Parliament, but not enforced and various parties of our country have felt its need.

When healthy competition comes in, the mind of the labourers extends not only to salary and rights, but also responsibility and duties.

Though the Indian population is about 100 crore, insurance has not become popular. Hardly one per cent of the population is under medical insurance.

Viewing from the political angle also, the time is conducive and it is also the correct time to open the insurance sector for private parties.

This Bill can be considered as an economical tool for deriving some benefits from the international arena. The Central Government should pave the way for this.

To protect the interest of the policyholders and to promote the growth of Insurance Scheme, this Bill is very essential to the country.

Healthy competition is a must and essential for the growth and development of the insurance sector because then only the people of this country can get several benefits from the Insurance sector.

I support this Bill on behalf of the DMK Party. Thank you.

SHRI PRIYA RANJAN DASMUNSI (RAIGANJ): Mr. Speaker, Sir, this major initiative in tune with the economic reforms of the country, is in controversy for the last few days in the electronic media, in the print media including the positions of respective parties towards this Bill.

Before I speak on this Bill, I would like to share the agony, the apprehensions and the anxiety of those employees of the insurance sector who are on strike today. I do not like to disregard their call and their struggle. They are part of us. They are part of our family and they are a part of our system in the trade union movement. But we have to deal with a very important matter today just on the eve of the new millennium.

I am grateful to the trade unions that while I receive their memorandum at least for once respectfully they have quoted the contribution of late Prime Minister Pandit Jawaharlal Nehru and late Prime Minister Shrimati Indira Gandhi whom they have traditionally criticised and abused year after year.

The Congress policy on this subject right after Independence is known to everyone of this country. The members sitting on the opposite on the treasury benches, members here and members there, cannot deny the fact that right after the national struggle, Pandit Jawaharlal Nehru, the then Prime Minister, picked up the basic issues. It is the people of India who will decide their destiny through the system called democracy and, therefore, the concept of mixed economy was relevant at that time and the struggle for the process to accelerate the goal of democratic socialism further culminated in the pattern of socialism by late Shrimati Indira Gandhi and was incorporated in the Preamble of the Constitution.

The abolition of the zamindari system in this country, the fight against feudals for aggressive land reforms in various States and the acceleration of the process of rural development leading to the establishment of the panchayati raj system were the dreams and contributions of Pandit Jawaharlal Nehru, Shrimati Indira Gandhi and Shri Rajiv Gandhi.

We never tried to undermine the importance of economic growth of this country be it on the industrial front or the agricultural front. Today, we are placed in a situation where we have to share the reality of the global economy. It is true. Let us admit the fact today that the entire Third World, the entire developing world has suffered a serious political and economic jolt because the Soviet Union got destabilized or dissolved. The dissolution of the Soviet Union and the destabilization of the Eastern Bloc, the socialist world did create a situation which was rightly or wrongly well exploited by the western countries to their own advantage. The developing world could not express anything except its helplessness for some of their projects were undone and the concept of economic self-reliance in countries like India and Malaysia were in jeopardy.

In such a grim situation, it was not India alone which was affected. Even the then leader of the Communist movement in China, Deng Xiaoping, in his first address in the Chinese People's Congress said, `We now look forward to a new era and we have to cope with the situation. It was not only Deng Xiaoping but it was Jiang Zemin who came forward to say that it was time for China to enter into WTO and, after the prolonged negotiation with the US, got the status of the Most Favoured Nation. These are facts of history. Let us be very objective and address this issue free from all other prejudices.

We are very much concerned about the fate of the LIC and the GIC. These issues have been addressed as if the LIC and the GIC are going to be casualties. If that is so, the Congress has to equally think about it because the LIC and the GIC were a continuation of the concept of Pandit Jawaharlal Nehru in 1956 and Shrimati Indira Gandhi when she also abolished the privy purses and declared that the right to property is not a birth right of a few in the cover of the fundamental rights. In that era of evolution or revolution, this was stated by the Indian National Congress from the Treasury Benches. The Congress policy is therefore not to compromise with those who want to exploit and plunder our country.

It was Mahatma Gandhi, who, on the first day of his arrival in India, being a very competent and articulate advocate in South Africa, decided first not to wear the type of dresses which were worn by the British in those days. He was projected as a half fakir and in reply, he said in the Round Table Conference, `I have not come here for drama but just to give you an image of how you have plundered India so that this much of cloth is not available for the poorest of the poor.' This message of Mahatma Gandhi was further translated into action to the extent possible by the Constitution of India, by Pandit Nehru and further established by Shrimati Indira Gandhi.