Govt to firm up view on Parliament panel reports on insurance, pension

The pension and insurance sector reform Bills are stuck for long on account of opposition from both BJP and key allies of the UPA government

The government will soon finalise its response to Parliamentary panel reports on insurance and pension sector bills so that the modified versions could be taken up for consideration and passage in the second leg of Budget session beginning 24 April 2012.

The Micro Financial Sector (Development and Regulation) Bill, 2011, will also be vetted by Cabinet for tabling in Parliament, a senior finance ministry official said.
The long pending financial sector bills like the Pension Fund Regulatory and Development Authority Bill 2011, Banking Laws (Amendment) Bill 2011 and Insurance Laws (Amendment) Bill 2008, will be soon sent to Cabinet for approval, a senior finance ministry official said.

The pension and insurance sector reform Bills are stuck for long on account of opposition from both BJP and key allies of the UPA government.

They oppose raising the foreign direct investment (FDI) cap in insurance sector to 49 per cent from 26% at present. They are also against opening up of pension sector to FDI.

The Standing Committee on Finance in its report on the Insurance Laws (Amendment) Bill, 2008, had said the proposal to increase the FDI cap to 49% in insurance companies seems to have been decided upon “without any sound and objective analysis of the status of the insurance sector following liberalisation”.
Besides, the draft Micro Financial Sector (Development and Regulation) Bill, 2011, had proposed that the RBI will be regulator for the sector. In addition, a Micro-Finance Development Council will be set up to advise the government on formulation of policies, schemes and other measures required in the interest of orderly growth and development of the sector and micro-finance institutions with a view to promote financial inclusion.

In his Budget speech for 2012-13, Finance Minister Pranab Mukherjee had proposed to introduce seven Bills in the Budget session. The second leg of Budget session will begin on 24 April 2012 and is expected to conclude on 22 May 2012.

He had said the government proposed to move the following Bills in the current session: Micro Finance Institutions (Development and Regulation), National Housing Bank (Amendment), Small Industries Development Bank of India (Amendment), National Bank for Agriculture and Rural Development (Amendment), Regional Rural Banks (Amendment), Indian Stamp (Amendment) and Public Debt Management Agency of India.

The Standing Committee on Finance has already given their recommendations on three Bills—Pension Fund Regulatory and Development Authority Bill 2011, Banking Laws (Amendment) Bill 2011 and Insurance Laws (Amendment) Bill 2008.

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M-cap of top six Sensex companies rise Rs18,234 crore

The market value of ONGC gained Rs5,219 crore to reach Rs2,33,907 crore in the shortened first trading week of the fiscal 2012-13 that saw the BSE benchmark Sensex gain 0.47% over 30 March 2012 closing

The combined market capitalisation (m-cap) of six of the top 10 BSE Sensex companies advanced Rs18,234 crore last week, led by ONGC whose value rose over Rs5,000 crore.

The market value of ONGC gained Rs5,219 crore to reach Rs2,33,907 crore in the shortened first trading week of the fiscal 2012-13 that saw the BSE benchmark Sensex gain 0.47% over 30 March 2012 closing. Last week, markets operated for three days with Thursday and Friday being public holidays.

SBI’s m-cap climbed Rs4,400 crore to Rs1,37,432 crore, followed by NTPC which added Rs4,164 crore to its value at Rs1,38,317 crore.

IT bellwether TCS saw a jump of Rs2,055 crore in its m-cap which reached Rs2,30,629 crore, while HDFC Bank gained Rs1,656 crore taking its value to Rs1,23,416 crore.

Similarly, ITC’s worth advanced by Rs740 crore to Rs1,77,595 crore.
In contrast to the gains made by these companies, RIL, Coal India, Infosys and Bharti Airtel saw erosion in value. Bharti lost Rs2,563 crore from its m-cap which was Rs1,25,318 crore as on Wednesday, while CIL’s worth slipped by Rs947 crore to Rs2,15,767 crore.

Infosys saw a decline of Rs829 crore from its value, while RIL shed Rs377 crore from its market worth. The m-cap of Infosys was Rs1,63,681 crore, while that of RIL was Rs2,44,641 crore as on 4 April 2012. RIL retained the number one position in the list of top 10 companies in terms of market value, while ONGC remained the second most valued company, followed by TCS.

State-owned Coal India was the fourth most valued firm, followed by ITC, Infosys, SBI, NTPC, Bharti and HDFC Bank.

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India likely to grow at 6.1% in 2012: Ernst & Young

Over the medium term, we expect a strong recovery in investment, which will help lift overall GDP growth over 9% by 2014, according to Ernst & Young.

India is expected to grow at 6.1% in calendar year (CY) 2012, similar to the pace recorded in the fourth quarter of 2011, according to the Ernst & Young's quarterly Rapid Growth Markets Forecast (RGMF).

Growth should be picking up in H2, 2012, provided the global economy does not experience a further shock. Over the medium term, we expect a strong recovery in investment, which will help lift overall GDP growth over 9% by 2014, it said.

“India’s domestic demand-driven growth model is acting as a catalyst for attracting foreign investments into the country. Although the ongoing global uncertainty may have prompted global investors to become more cautious, India’s inherent advantages and proven resilience to counter-act macroeconomic challenges generally outweighs these concerns,” Ernst & Young India partner & India markets leader Farokh Balsara said.

According to the forecast, in India, the biggest development will be in the lower middle class with the number of households with disposable income of $5,000 to $15,000 rising to around 150 million in 2020 from just under 100 million now. In particular, this represents opportunities for companies in the developed economy such as US and Europe for investments.

While the Purchasing Managers Index (PMI) and car sales data in January and February of 2012 have hinted at a stronger growth dynamic for India, the country will need to address rising inflation, which is still high.

As per the forecast, the country’s central bank will not be in a position to cut interest rates until core inflation (excluding food) is on a clear downtrend and that may still be some months off, particularly as the economy has recently gained considerable momentum.

The wholesale price inflation should trend down through 2012 to about 5% in Q4, reflecting the lagged impact of the weaker economy and lower food prices, the forecast said.

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