Keep it simple, silly
The era of an opaque and imperious government is over. If the UPA wants a policy to go through, it must explain its benefits simply so that the aam admi can figure it out.
By Raj Chengappa

While judging a news development, journalists like me are trained to ask a brutal question: Who Gives a Damn? Abbreviated to WGAD, it meant why should you know or care about a breaking news story. Focusing on an event’s relevance helped determine the kind of display or importance given to the item in the newspaper in your hand.

It’s time Indian politicians or governments began answering the WGAD question when they brief the public about actions they take, especially on the economic front. A case in point is the recent announcement that the Union Cabinet had decided to increase the limit on foreign direct investment (FDI) in the insurance sector to 49 per cent. It immediately set off diametrically opposite reactions, with much of the corporate sector welcoming the announcement and most of the opposition parties denouncing it.

Now why should I as an aam admi (not to be confused with Arvind Kejriwal) be concerned whether the FDI in the insurance sector is 26 per cent, 49 per cent or even 100 per cent? Will it make me pay a lower annual premium for my life insurance policy or ensure me a greater payment? What impact will it have on my motor vehicle, health or house insurance policies? In short, will the Union Finance Minister please brief us as to why we should give a damn?

The Harvard educated P. Chidambaram did state that “the benefit of this amendment will go to the private companies, which require a huge amount of capital, and that capital will be facilitated by the increase in the FDI limit from 26 to 49 per cent.” Beyond a handful of insurance companies and large investors, why should you and I care? Nowhere did the erudite Finance Minister articulate in simple terms how the common man would benefit. The Opposition too was guilty of the same fault when it denounced the government’s decision without explaining why.

Both the government and Opposition should take a leaf from the current presidential contest in the US, where Barack Obama and his challenger Mitt Romney had to debate complex government policies face to face on television. Both candidates had to explain their economic policies in simple terms. If Romney won the first round, it was because he seemed to have greater “connect” with the audience with his arguments.

Coming back to the insurance sector, I had to call up my wife’s uncle, who once headed a large public-sector bank, to understand the significance of the Cabinet decision to increase the FDI in the insurance sector. He explained that insurance penetration in India is low because companies have to maintain a high solvency ratio, mandated by the Insurance Regulatory and Development Authority, to ensure that they have adequate funds to keep their pledges to its customers.

Since Indian investors in the insurance sector are limited, there is a need for infusion from foreign investors that would allow Indian insurance companies to expand their policy reach. That would enable the middle and lower-income people in the country, like you and me, to avail of a range of insurance policies, whether for life, house or health. on would ensure that companies offer policies at premiums affordable to a larger number of people.

In my case, I recall that soon after I got my first job in 1977, I took out a 25-year-term life insurance policy offered by the public-sector LIC — which then enjoyed a monopoly — for what I thought then was a princely assured amount of Rs 50,000. When I outlived my policy, the sum returned to me was not enough to have sustained my family for more than a month.

It was around that time that the government opened the insurance sector to private players, and also allowed FDI of up to 26 per cent. I soon found that I had a range of life insurance policies to choose from with competitive annual premiums. Apart from a fresh life insurance policy at a premium that made it worthwhile, I also obtained an affordable health insurance that made me feel more secure. When the annual renewal for my policies is due, insurance companies vie with each other to offer me better rates. My loyalty lies with the company that offers me the best deal.

If the recent Cabinet decision to further open out the insurance sector will enable me, and a host of aam admis, to benefit, I don’t see why we should oppose it. Mamata Banerjee would have to come up with a good enough explanation for her angst. The larger message is that if the UPA wants a policy to go through, it must keep it simple so that the common man can figure it out and take a call. The era of an opaque and imperious government is over. 

raj@tribunemail.com