P A G E
Thursday, December 2, 1999
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E D I T O R I A L P A G E |
Thursday, December 2, 1999 |
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End
of sell-off panel
CRIES
OF BHOPAL GAS VICTIMS |
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Insurance
sector: challenges ahead
December 2, 1924 |
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End of sell-off panel SECOND generation economic reforms is the buzz word and Parliament has become the battleground between its passionate advocates and equally passionate opponents. The government is the chief rallying force of the supporters. Is it? Suddenly there is room to suspect its total commitment. It has allowed the Disinvestment Commission, the focal point of liberalisation, to fade into history even without a formal press note. As economics students know, liberalisation is finally about government withdrawing from running business and instead becoming a mere economic watchdog. And in this scheme of things, the three-member Disinvestment Commission had a pivotal role. But its three-year term ended on Tuesday and long before that the chief of the extinct panel, Mr G.V.Ramakrishna, wrote to the Ministry of Heavy Industry and Public Undertakings and met the new Minister Manohar Joshi. He met with total silence and inaction; so the members packed their bags and bowed out. It is still possible for the government to sell slices of public sector units to raise the budgeted revenue of Rs 10,000 crore. But the process will be purely ad hoc and the approach bureaucratic. That is a recipe for either bungling or generating controversy or both. That is the loud lesson from the Gail misadventure when the government sold shares to two foreign companies at Rs 70 each on the day when the stock exchange rated it at nearly Rs 80. The commission, which had as member the well-known economist, Prof Suresh Tendulkar, had done excellent work and fashioned innovative ways. It is a pity that the government has allowed the term to expire without extending it or setting up a new commission. The panel was a nuisance
for the bureaucracy. And it is obvious that the babus
have won and liberalisation has lost. Without questioning
its motive, it can be safely said that the bureaucracy is
ultra conscious of its turf and a powerful panel with a
fighting chief is not its idea of a “strategic
partner”. This is the second time that the panel has
become a victim of intrigue. During the caretaker days of
the second United Front government, the panel lost the
monitoring role and became just an advisory body. Even
this evokes antagonism and this mendset shows hostility
to the very concept of core economic reforms. Ironically
the virtual dissolution has been successfully sold in the
name of insulating the PMO from the inherently risky ways
of unloading shares in the market. Yet, there have been
serious charges of wrongdoing apart from patently
unsatisfactory decisions like forcing the three leading
oil companies to swap shares and credit the proceedings
to the government account. The panel tried without
success to impress on the government to adopt fool-proof
and safe methods of disinvesting. The last three months
of the year are unfavourable, it found, since leading
investors tend to sell their holding; this advice was
ignored in the case of Gail shares. A chunk of shares
should be offered to small investors, who are more likely
to retain them and thus stabilise the market quotations.
The funds generated this way should be ploughed back
either to develop infrastructure or repay debts and not
as routine revenue. Above all, there should be a
high-powered authority to disinvest and the government
should keep aloof. These recommendations contain the clue
to its early retirement. No bureaucrat would like to give
up his powers to decide on such a major operation like
disinvestment involving tens of thousands of crores of
rupees. |
Imprisoned by drugs THE report carried by The Tribune on Wednesday about a large number of inmates of the high-security Amritsar Central Jail being drug addicts is alarming. And yet, it is only the tip of the iceberg. In fact, the drug menace in jails is widespread. In Amritsar, the 53 drug addicts were identified on the basis of the tranquillisers they consumed on the prescription of jail doctors. Things are far worse elsewhere in the region. In a raid on the jails in Haryana a few months ago, thousands of tablets of narcotic drugs, charas and opium were detected. That was proof enough that the drive to curb drug-smuggling had been ineffective. If drugs can enter prisons so easily, is it too difficult to procure arms? All this apparently happens with the connivance of certain officials. The unfortunate part is that instead of exposing the black sheep, the entire machinery spreads a shield of protection over those who belong to the official ranks and try to pass the buck. The Amritsar jail superintendent has gone to the extent of making a fantastic claim that in all likelihood, the prisoners consumed drugs while on their way to courts. This means that he has washed his hands off the whole ugly affair. The interesting part is that the medical board, which visited the jail, was constituted at the behest of the Punjab Human Rights Commission (PHRC) acting on an anonymous complaint that had alleged that drugs were being made available to prisoners in connivance with the authorities concerned. The jailor has a ready answer to that also. It was a Deputy Superintendent (Jail) transferred on “administrative grounds” who was behind the complaint, says the great sleuth. The government needs to take a serious view of the situation and conduct a thorough enquiry to fix responsibility. There are reasons to
believe that there is a mafia in operation, which
supplies drugs and other items to jail inmates. And it is
not just a matter of fleecing certain individuals. The
consequence is that the prisons have become dens of
corruption instead of reform centres. Whether it is
because of overpopulation or some other reasons, there is
very little control on what goes on behind those high
walls. As a result, even those incarcerated for minor
crimes come out fully hardened. Equally shocking is the
fact that the official de-addiction centres are just not
geared up to cope with the situation. The de-addiction
clinic of the hospital has only 10 beds. Leave alone
helping the addicts, it did not have the infrastructure
even to monitor them suitably. What needs to be
appreciated is that anybody who has fallen victim to a
drug is a patient who can be nursed back to health
provided there is enough loving care available to him. In
reality, exactly the opposite happens. He is either
despised or left to fend for himself. Most addicts fall
deeper and deeper into the bottomless pit. The situation
is already bad. Continued apathy will lead to disastrous
consequences for the whole nation. |
Barbaric medieval legacy THE tragic end to a beautiful love story in Chandigarh on Tuesday in a single stroke removed the distinction between fact and fiction. Through Gurcharan Singh and Jasbir Kaur, the star-crossed lovers of the real life story, even the youth of today, exposed to more liberal values because of the IT revolution, may be able to relate to the pain of Mirza-Sahiban, Sohini-Mahiwal, Heer-Ranjha, Shireen-Farhad and the universal symbol of unrequited love Laila-Majnu. In all these tales feud or social or cultural differences between the families of the lovers ensured tragic ends to happy beginnings. The Jasbir-Gurcharan story was no different. The law may find Jasbir’s brother Kulbir Singh guilty of killing her husband Gurcharan in cold blood and thereby forcing her to end her life. But social historians must take note of the sense of pride and elation Kulbir showed after putting a bullet through his brother-in-law’s head. He said that his sister Jasbir was next on his hit list. After Jasbir ended her life, Kulbir displayed the primeval side of personality when he said that “ever since she eloped with a man of a caste we would never give our daughters to, my mother had to suffer tremendous humiliation. The entire village tormented us. Now my mother can hold her head high”. But there is no law in the sub-continent for punishing not just a village but society itself for forcing large populations to cling on to medieval values even as the country moves into the next millennium with impressive achievements in the fields of science and technology. In neighbouring Pakistan a mother had her daughter killed with the help of hired goons in the law chamber of well-known human rights activist Asma Jahangir. Why? Because the daughter, fed up of being tortured by her husband, wanted divorce. Just as Gurcharan had inflicted a deep gash on the upper caste “family honour” of Kulbir by eloping and subsequently marrying his sister, the Pakistani girl was seen as trying to drag the family’s name in to mud by seeking to divorce {Islam gives this right to women also} her abusive husband. Instead of stamping out
the medieval practice of creating caste and
religion-based compartments Indian society overtly and
covertly continues to shower its blessing on those who
are leading the resistance to social changes sought to be
introduced through reason and legislation. To expect a
society, which has not accepted inter-caste marriages,
{the malaise in some form or the other is found among all
religions in India} to condone, if not support,
inter-religious unions is to expect the impossible to
happen. That is why the inter-religious tension currently
simmering in Ladakh over reports of Buddhist girls living
with Muslim boys should not be taken lightly. Bloody
Muslim-Buddhist clashes are not new to Ladakh. One
runaway girl was recently located in Chandigarh and
restored to her Buddhist parents. Be that as it may,
while analysing the factors responsible for the tragic
end to the Jasbir-Gurcharan love story social scientists
must also try to explain why the West seems to be
relatively free of the curse of racial and religious
intolerance in matters matrimonial. That some form of
social apartheid was enforced in medieval Europe is not
in doubt. It provided inspiration to William Shakespeare
to pen the immortal and universally popular star-crossed
love story of Romeo and Juliet. But in today’s West
families do not pull out their shotguns and go after boys
and girls defying their wish. Can the social revolution
in the West be traced to the industrial revolution and
the consequent all-round economic and educational
upliftment of entire populations in continents inhabited
by the European races? If that is the case, Prof Amartya
Sen’s model for uniform and all-round development of
the country should be put into place without further loss
of time. |
CRIES OF BHOPAL GAS VICTIMS AN estimated one lakh children born around or immediately after what has come to be known as the Bhopal gas tragedy of December 2-3, 1984, are a living monument to the insensitivity of rulers, irrespective of their party affiliations. The Supreme Court had expressed, in the beginning of this decade, its profound concern on the fate of “yet unborn children of mothers exposed to MIC toxicity”. Disposing of a string of writ petitions on October 3, 1991, a Division Bench of the apex court observed: “We are of the view that such contingencies shall be taken care of by obtaining an appropriate group insurance cover from the General Insurance Corporation of India or the Life Insurance Corporation of India for compensation to this contingent class of possible victims”. The judgement said: “The period of insurance cover should be eight years. The number of persons to be covered by this group insurance scheme should be about and not less than one lakh of persons... as this figure broadly accords with the percentage of population of the affected wards... and the number of persons found to be affected by medical categorisation.... The possible claimants fall into two categories: those who were in existence at the time of exposure; and those who were yet unborn and whose congenital defects are traceable to MIC toxicity inherited or derived congenitally”. Madhya Pradesh had a BJP government led by Mr Sunderlal Patwa when the Supreme Court judgement came. It did not bother to follow it up. The BJP leaders had never shown any concern for the victims of the world’s biggest industrial disaster. Rather most of the schemes launched by the Motilal Vora government in the late eighties for the welfare of the Bhopal victims were closed down during Mr Patwa’s regime. The real shock came when Mr Digvijay Singh’s Congress government started following in Mr Patwa’s footsteps. As Congress MP and Pradesh Congress Committee (PCC) President, Mr Digvijay Singh had been vehemently attacking the BJP government for its antipathy towards the Bhopal gas victims and had on many occasions joined the dharnas and agitations organised by the voluntary organisations in support of the gas victims. The Congress manifesto for the 1993 assembly elections (prepared under Mr Digvijay Singh’s directions) had promised all steps for quick disbursal of compensation to the gas victims and resumption of the projects which were closed down by Mr Patwa. His attitude towards the gas victims changed soon after he became Chief Minister in December, 1993. The Bhopal gas victims are now an anathema to him. His party’s manifesto for the 1998 assembly elections does not even mention the Bhopal gas victims. These estimated one lakh children are today without any medical cover in spite of the directive of the Supreme Court. According to the Bhopal Gas Peedit Mahila Udyog Sangathan, a voluntary organisation active among the Bhopal gas victims, almost the entire generation of the old city born immediately before or after the night of the disaster is suffering from lung and liver ailments. No one appears to care for them. A poignant case is of Dimple Thadani of Ward No. 6 who was denied the opportunity to even fill the compensation form because she was born on 21.3.1985. The Deputy Commissioner apparently refused to accept that the MIC leak of December 2-3, 1984, could have affected those about to be born. The entire scene presents a dismal picture on the eve of the 15th anniversary of the Bhopal gas disaster. A major part of the money spent in the name of the Bhopal gas victims has gone into the pockets of politicians, bureaucrats and other well-connected people while the genuine sufferers have been denied the compensation under one pretext or the other. Many such cases have in the past few years been brought to the notice of the authorities by the voluntary organisations, but to no avail. Shamim Begum of Ward-42 (case no. 234B/92), for instance, was denied payment of the compensation amount of Rs 75,000 passed in her favour, because the Deputy Commissioner did not accept that she was literate even though she had produced her marks-sheet of the eleventh standard which she had passed. The rules stipulate that the compensation awarded to illiterate victims will not be paid to them but will be put in the bank in fixed deposits in their name. Shamim Begum had passed her eleventh class in Urdu. A complaint made by Bhopal Gas Peedit Mahila Udyog Sangathan convener Abdul Jabbar to the Welfare Commissioner (Bhopal gas disaster) points out that 132 persons in Ward No. 54 were paid compensation even though they did not have the required evidence to show that they were affected by the gas leak. On the other hand, a large number of the affected people in Ward No. 46, one of the worst affected, are still waiting for the payment of compensation to them. The Chairman of the Parliamentary Committee for the Ministry of Petroleum and Chemicals Mr A.R. Antulay, had stated here on September 9, 1997, that the committee members had been told by the Bhopal gas victims organisations that much of the money meant for the victims had gone into the pockets of bureaucrats and politicians. This admission from Mr Antulay had come after persistent questioning by reporters at a Press conference organised by the committee members at the end of their two-day visit to Bhopal to study the problems of the people who were struck by the world’s biggest industrial disaster. Mr Antulay said that the committee had got a new perspective about the tragedy after the spot visit. That he promised many things and forgot all on reaching Delhi is a different story altogether. According to official records, 22,149 claims for death and 10,01,723 claims for injury were registered in Bhopal. Over 6000 deaths have been adjudged to be exposure related with a majority of the death claims having been “converted” arbitrarily into injury claims. Well over 2,00,000 of the survivors are today in desperate need of medical attention, and 10 to 15 people are dying every month from exposure-related illnesses. Breathlessness, persistent cough, diminished vision, early age cataract, loss of appetite, menstrual irregularities, recurrent fever, neurological disorders, fatigue, weakness, anxiety and depression are the most common symptoms among the survivors. Union Carbide still continues to withhold information on the composition of the leaked gases and their effects on the body. The corporation claims these are “trade secrets”. In the absence of information, doctors in Bhopal still do not know the proper treatment of exposure-related illnesses. The best of treatments provide only temporary relief, if at all. Indiscriminate prescription of steroids, antibiotics and psychotropic drugs is potentially compounding damage caused by exposure. The inadequacies of the government’s health service have led to a flourishing business for private medical practitioners. In the severely affected areas nearly 70 per cent of the private doctors are not even professionally qualified, yet they form the mainstay of medical care in Bhopal. The Bhopal Memorial Hospital Trust set up by Union Carbide is as much in the dark regarding treatment. Many of the drugs being used by the trust’s community clinics are causing more harm than good to the chronic patients. To make the matters worse, new diseases have started manifesting after so many years. The number of people with cancer and tuberculosis is alarmingly high and rising. Official initiatives in monitoring and treatment of these diseases are badly flawed. Young women who had been exposed at infancy have chaotic and painful menstrual cycles on attaining puberty. Many have three to four cycles in a month and there are those as old as 17 and 18 years who have yet to have their periods. Gas-affected parents find it difficult to arrange the marriage of their daughters, and many women have been deserted by their husbands for exposure-related damages to their reproductive system. The Madhya Pradesh government claims to have spent about Rs 70 crore on the economic rehabilitation of the survivors with little to show for it. Today there are at least 50,000 men and women who are so sick and weak from exposure-related diseases that they can no longer earn their livelihood from hard physical labour. Yet the government’s programmes have offered jobs to only 80 women. A Special Industrial Estate was developed where 152 worksheds were built at a cost of Rs 8 crore in 1990 for setting up such industrial units as could employ at least 10,000 gas-affected people. Only 16 of these sheds are partially functional and 52 have been converted into barracks for housing the Rapid Action Force (RAF). Under the vocational training programme started by the government in 1986, only 6,461 persons have received any training in the past 13 years. An Industrial Training Institute started in 1994 by the government with an investment of Rs 8 crore is yet to become fully operational. Without avenues for employment, the training offered there has little relevance for the survivors. Thirteen local NGOs, most of whom have connections in the ruling party, were entrusted with the running of training-cum-production centres by the government in 1994. All but two of them had wound up by last year. In 1998, production of jute handicrafts was started with an investment of Rs 1 crore and 400 gas-affected women were given employment. This project was terminated in March this year on the ground that there was no market for the goods produced. While the Congress government has adopted an indifferent attitude towards the Bhopal gas leak survivors, the BJP, the main Opposition party, is agitating to secure compensation to the residents of the “remaining 20 wards” which an Indian Council of Medical Research (ICMR) study had found unaffected by the gas leak. The demand for paying compensation to the residents of the unaffected 20 wards was first made by the BJP government of Mr Sunderlal Patwa in 1990-91. As the then Union Government raised objections to the demand, Mr Patwa had, in a subsequent memorandum sent to the Union Government on January 25, 1991, stated: “Although, on merit, we have only a weak case, this issue (of compensation to the remaining 20 wards) is bound to have political implications which the government may not be able to easily ignore.” Interestingly, the BJP demand has been endorsed by Mr Arjun Singh, who was the Chief Minister when the disaster had struck Bhopal and had played a vital role in the cover-up of the lapses, of both the administration and Union Carbide. (The writer, a
senior journalist, is based in Bhopal.) |
Widening caste divide in
UP’s BJP TWO photo opportunity events of the last week presented a hazy picture of the possible transformation of the Indian polity in the near future. The first was the rousing welcome accorded to Prime Minister Atal Behari Vajpayee at Amausi airport on his first visit to Lucknow after he took over again as Prime Minister. The second event was the reception on the wedding of a son of former Defence Minister Mulayam Singh Yadav. Nothing could have clearly reflected the divide that is taking shape in the Indian polity though the involved players might not be cognisant of the divide. The set of circumstances and the compulsions of the political survival are driving them gradually towards the divide, the backward versus forward classes. At Amausi airport, beaming leaders, mostly belonging to forward classes surrounded the Prime Minister. They had won their battle against former Chief Minister Mr Kalyan Singh and had succeeded in his removal. Their enthusiasm and jubilation was natural. Mr Kalyan Singh was conspicuous by his absence, as he had preferred to reach his own constituency in Aligarh to talk to his people. The Prime Minister had come to thank his voters for reposing their faith in him. But Mr Kalyan Singh was the main attraction at the marriage reception in the Capital. Even though Mr Atal Behari Vajpayee was present at the reception, all eyes were fixed on Mr Kalyan Singh with other leaders from backward classes; Mr Mulayam Singh and Mr Laloo Prasad Yadav standing shoulder to shoulder with him. Their responses were to the emerging situation as all could see that it was impossible for Mr Kalyan Singh to stay put in the Bharatiya Janata Party after his loud outburst against the Prime Minister. He held Mr Vajpayee responsible for his removal from the office of Chief Minister without giving him an opportunity to defend himself. While he was punished for the debacle of the party in UP in the last Lok Sabha elections, the others who were equally responsible for the dismal performance of the BJP were rewarded by inducting one in the Union Cabinet and two in the state cabinet. It was not a coincidence that the man who was punished belonged to the backward class and those rewarded come from the upper castes. At least that is what Mr Kalyan Singh would like his constituency to believe and brood over. The crack in the BJP in Uttar Pradesh was not a sudden development. It had been simmering within for a long time as the upper castes felt that Mr Kalyan Singh was not treating them fairly. They nursed a grudge that he was attending to the interests of the backward classes more by providing them offices and privileges. Two of his senior colleagues have been wearing their ambition of becoming the Chief Minister on their sleeve for a long time. In fact, they nursed a grievance that they lost the opportunity only because the Central leadership was more concerned about the BJP raj in New Delhi. Hence it was tolerating Mr Kalyan Singh. The RSS top brass too was not happy with the Kalyan Singh’s style of governance. The Prime Minister had also expressed his displeasure by his action during the two visits to Lucknow. On both occasions, he indicated that Mr Lalji Tandon was his more trusted man and not the Chief Minister. The Prime Minister preferred residence of the Cabinet ministers to have tea with the party legislators and not the premises offered by the Chief Minister. It may appear to be his personal preference but the legislators and party workers immediately read political significance. It was indicative of the uneasy relations between the Prime Minister and the Chief Minister. The significance was lost on no one. It merely encouraged the detractors of the Chief Minister to come out in the open to resist the authority of the Chief Minister. The divide within the BJP sharpened at the time of distribution of the party ticket for the Lok Sabha elections. The trio — two cabinet ministers of the state and the state party chief — ensured that many supporters of Mr Kalyan Singh were not accommodated. Their ire was particularly against Sakshi Maharaj who had stood by Mr Kalyan Singh when he had earlier sensed a move to remove Mr Kalyan Singh long before the Lok Sabha elections. He had threatened that all backward class members of Parliament stood by Mr Kalyan Singh and would resist any attempt to remove him. So Sakshi Maharaj was denied the party nomination to contest again. During the campaign period there was open talk that Mr Kalyan Singh would be removed. Sakshi Maharaj hit back in revenge and actively campaigned against the party candidates in the Central belt of the state during the elections. Mr Kalyan Singh himself did not take active interest in campaigning for the party candidates. He had a selective approach. For he could foresee the events that would follow the election once Mr Vajpayee was in saddle. The message that Mr Vajpayee had delivered was so clear that it could not be mistaken. The delay of a month in his removal was only due to the fact that the party high command could not decide on his successor. It could not reward any of the three claimants, as it would have conveyed a wrong message to the backward classes. Ultimately, they pulled out from moth-balled reserves, allowing Mr Ram Prakash Gupta, a Bania by caste, to take over from Mr Kalyan Singh. Given to the Prime Minister and his proteges in the state, they would not have accommodated any of the staunch supporters of the former Chief Minister in the new Cabinet. But it would have been too much of a political risk. So a few had to be given a berth. There was an offer to Mr Kalyan Singh either to accept the party post or join the union Cabinet. He was aware of the Prime Minister’s dislike for him; so he feared that he would again be humiliated and thrown out. It would end his political career. He could survive and be a threat to the state BJP unit only if he remained outside the office. He could see that eventually he would be forced out. Instead of waiting for his eviction from the party, he decided to invite the martyrdom by provoking the party leaders, especially the Prime Minister to throw him out of the BJP. The choice of action against him after his public outburst against the Prime Minister personally was not an easy one for the party high command, as some leaders could clearly see that his departure would cost heavily to the party. The party had won 59 seats in the 1996 elections when Mr Kalyan Singh was fully involved in the campaign. His selective approach had reduced the party tally to only 27 seats. There are differences in reading the results. Many believe that the alienation and shift of the upper castes cost the party heavily. However, the fact remains that the two national parties, the BJP and the Congress, have won between them only 39 out of 85 seats in the state. Between Mr Mulayam Singh’s Samajwadi Party and Ms Mayavati’s BSP, they have won 39 seats. Thus the backward classes and Dalits have asserted their own numerical superiority to provide them more seats than the two national parties. The foundation for a new alignment was thus laid in the last Lok Sabha elections. The BJP leaders would naturally indulge in legal semantics to establish that Mr Kalyan Singh was merely suspended and not removed from the party. Whatever be the form of the action, the party high command has conveyed a political message that it was not comfortable with Mr Kalyan Singh. If things do not work out, some enthusiastic person in the BJP might even suggest enquiries into the Kalyan administration so as to pin him down as a corrupt man. It is an easy way, though not an effective way. It is being tried out on Laloo Yadav in Bihar with the self-appointed guardians of the democratic system but in effect seeking personal glory. More they push Mr Kalyan Singh to the wall, more effective he would become. There are many who would
raise doubts whether the minorities would remain with Mr
Mulayam Singh if he joined forces with Mr Kalyan Singh?
There would also be questions if Mayavati did not join
them? These are no doubt questions that need answers. But
the fact remains that the action against Mr Kalyan Singh
has made the backward classes even more conscious of the
efforts of the upper castes to retain their domination on
the political system. In the coming months, the hazy
picture presented by the two events of the last month
would begin to acquire clear contours. It is the logic of
events that would overtake whatever might be the
intentions. The collapse comes when the logic of events
outruns the logic of intentions. The Congress erosion
began as it did not recognise the demand of the backward
classes for their share in power. The BJP has done so in
20 years whereas the Congress had taken 40 years to do
same. The new millennium promises to dawn with new
political alignments within the system. |
Insurance sector: challenges ahead ENDING years of uncertainty, the opening up of the insurance sector in India for private participation is all set to become a reality with the principal political parties, the ruling Bharatiya Janata Party-led National Democratic Alliance and the Congress, agreeing to push reforms in the crucial financial services area. The passage of the Insurance Regulatory and Development Authority (IRDA) Bill, the all- important legislation required to unshackle the monopoly of the Life Insurance Corporation and the General Insurance Corportation in the insurance sector and the setting up of a regulatory authority to supervise and regulate the speedy changes that are likely to come about with the opening up of the industry to private, both domestic and foreign, operators is all set to see the light of day. There has been strong opposition to the proposed legislation by the Left and other parties leaning to the Left of the political ideological spectrum on the ground that the opening up of the insurance sector would lead to the flight of capital abroad and dilute the financial sector’s contribution to the social sector. But, in the absence of a majority in Parliament they can do little to prevent its passage. Significantly, India has initiated a new round of economic reforms at a time when the World Trade Organisation’s ministerial meeting is on at Seattle and efforts are on to bring developing economies out of their shell. The proposed measure should also help change world perception on the openness of the Indian economy. According to a leading US think- tank, India is one of the six “mostly unfree” economies in the world. The IRDA Bill, which has been hanging fire for several years now, has, however, the unique distinction of being cleared by a Standing Committee of Parliament, represented by representatives of all political parties, and it is perhaps for the first time that the government has agreed to all the recommendations made by the committee. In a way, the government is right when it says that the IRDA is the best example of consensus politics and it addresses the concerns of all the sections of society. While aiming to encourage private-sector participation in insurance in a big way, the provisions of the IRDA Bill also acknowledge domestic concerns that new insurers must be strong and well regulated; that insurance premia which are substantial should not seep out of the country; and that foreign participation in the sector should be limited. Provisions To address these concerns, the Bill requires direct insurers to have a minimum paid-up capital of Rs 100 crore, and in case of reinsurance Rs 200 crore. This would ensure that non-serious players are kept out and only those with sound financial backing are in the business. The proposed law makes it mandatory that the funds of the policy holders are invested only within the country and the share capital of international companies is restricted to a minority 26 per cent. Indian holders and promoters of insurance companies, too, would have to reduce their equity holding to 26 per cent in 10 years’ time. To prevent concentration of insurance business in urban areas, the Bill prescribes that every insurer would undertake such percentages of life insurance business and general insurance business in the rural or social sector as determined by the proposed authority. Likely impact According to the Special Secretary (Insurance), Mr B.K. Chaturvedi, the Indian insurance market could treble to about $ 25 billion in 10 years after opening up of the sector and provided the economy grows at a steady 7 per cent. The total premium collected at the moment is $ 8 billion, which accounts for less than 0.3 per cent of the global insurance pot of around $ 2500 billion. A liberalised insurance sector, according to the Chairman and Chief Executive of Old Mutual PLC, one of the biggest insurance firms in the world, would play a major role in development of the country’s economy and infrastructure by collecting savings of individuals and mobilising it into large scale capital for long-term investment. Life insurers, like in other parts of the world, would become major holders of government loan stocks and shares on stocks exchanges, and could also emerge as major property owners or developers. Though 50 per cent of the insurance business in India comes from corporates, the availability of a large number of insurance products would spur individual consumers to avail of them. Health insurance for one is a segment with great potential as existing products in the country are insufficient. The GIC’s Mediclaim scheme at present covers around 2.5 million people and there are too many preconditions in the scheme that prevent consumers from getting relief. The retail segment in particular offers a large scope for new companies as currently personal insurance premium constitutes only 12 per cent of Indian general insurance premium. Insurance cover for the emerging services sector and the financial sector would also become a reality. The government’s contention is that the premium that would flow into the insurance companies’ coffers would prove useful for the gigantic task of building India’s infrastructure — roads, power, hospitals, houses — all of which needs long term investments and huge resources. Opposition Members of the Left parties and unions representing more than two crore employees in the financial sector are of the view that the opening up of the insurance sector to private companies would lead to large-scale unemployment. Market-savvy companies, backed by multinationals, would swamp the upper end of the Indian market and with little commitment for the social sector confine public sector insurance companies to the rural areas. According to Mr Basudeb Acharya (CPI), the government argument that the entry of new players would mean better products and choice for the consumer was not correct as the new players would concentrate only on affluent and urban customers as foreign banks did until recently. He also fears that the foreign operators would find ways to siphon off profits from the country and their entry would infringe on the country’s economic sovereignty. The General Secretary of the All- India Insurance Employees Association, Mr N.M. Sundaram, is of the view that the opening up of the insurance sector would lead to siphoning off of funds of the common people. Defence Proponents of a liberalised insurance sector, however, contend that the apprehensions are misplaced. A paper prepared by KPMG, a leading management consultant, says that multinational insurers are indeed keenly interested in emerging insurance because their home markets are saturated while emerging countries have low insurance penetrations and high growth rates. While the impact of global operations on their business may be large, typically foreign insurers take only a small share of an individual country’s market. In Taiwan, for example, foreign companies took only a 3 per cent share even seven years after opening up. Similarly, in China — a large and complex market like India — private insurers have not made much headway. Yet, new entrants find insurance attractive because even a small share of a large and growing market can be profitable. While nationalised insurers are hampered by their large scale of operations, public sector bureaucracies and cumbersome procedures, potential private entrants expect to score in the areas of customer service, speed and flexibility. The consumer will be the
real beneficiary as he would not only get a wide array of
services but even get better service from the
nationalised insurers, who when faced with competition,
are bound to improve their game. |
December
2, 1924 THE advice which Mahatma Gandhi gives in his message regarding Kohat will, we earnestly hope, be carried to heart both by the Hindus and Mahomedans of Kohat and the Government. To the first, he says, that the Kohat question is an all-India question, that both the Hindus and the Mussalmans of India are interested in a proper, honourable, and correct solution of that question, and that any settlement they may agree to should be viewed from a national as distinguished from a parochial standpoint. For the Hindus of Kohat this may be a somewhat hard bit to swallow, for men struggling for their very existence and the rudimentary things of life are not in the best position to think of larger and wider interests than those that concern them immediately. Still we are confident that if no undue strain is put upon their patience or their power of endurance, they will do their level best to carry out the Mahatma’s wish. To the Government, the Mahatma says that it would be an earnest of good faith if they would take the public into their confidence and secure public approval of any terms of settlement that they might propose for the acceptance of the two communities. For the Government to
fail to follow this common sense course would, as we have
already said more than once, be to defeat their own
professed object. |
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