Corporates feel that the forward looking measures would infuse the much-needed capital in the insurance and pension sectors
New Delhi: India Inc has termed government's second wave of reforms, including decisions to open the pension sector to foreign investment and raising the foreign direct investment (FDI) cap in insurance to 49%, as 'path-breaking and landmark', reports PTI.
"The new instalment of big bang reforms is a clear message that the government is determined to strengthen the economy," FICCI President RV Kanoria said.
He said that these forward looking measures would infuse the much-needed capital in the insurance and pension sectors.
Kanoria also urged the government to make investment guidelines more flexible so that such funds can be used to support infrastructure development.
"Today, insurance and pension funds are constrained to participate in infrastructure projects as these are required to invest a substantial portion of their funds in government securities and also not allowed to invest in projects rated below a certain level. These limitations need to somewhat relaxed," he added.
Sharing similar views, CII said the industry was anxiously waiting for the clearance of the Companies Bill for its introduction in Parliament.
"The new company law is expected to be more streamlined and facilitative than the existing 55-year-old Companies Act, it seeks to replace," CII Director General Chandrajit Banerjee said.
Banerjee said on enactment, the Companies Bill will be a boon for business, corporates, investors and stakeholders at large.
"The new law would strengthen the concept of shareholders democracy and offer protection of the rights of minority stakeholders," he said.
Poor showing by the manufacturing sector pulled down the GDP growth to 5.5% in the first quarter, the decade's worst Q1 performance.
In second wave of reforms decisions within a month, the Union cabinet cleared FDI in pension sector while hiking the FDI limit in insurance to 49%
Unfazed by the uproar over decision on foreign direct investment (FDI) in retail, the Union Cabinet on Thursday announced some big-ticket reforms like opening pension sector to foreign investment and raising FDI cap in insurance sector.
The Pension Fund Regulatory and Development Authority (PFRDA) Bill seeks to open up the pension sector to FDI of up to 26% while the Insurance Laws (Amendment) Bill seeks to raise the FDI cap in insurance sector to 49% from 26% at present.
This is the second wave of reforms decisions to be undertaken by the government within a month. On September 13, the government had approved the decision of allowing 51% FDI in multi-brand retail, besides relaxing FDI norms for civil aviation and broadcasting sector.
The decision on FDI in retail triggered a major uproar, with some allies and opposition parties launching a massive attack on the government. Trinamool Congress even withdrew support to the government.
Over 70% of the country's middle and lower income families will be forced to cut spendings on festival in order to meet their monthly expenses first