People's Democracy

 AIIEA Opposes US Coercion On Insurance

THE All India Insurance Employees’ Association (AIIEA) has strongly objected to the statement of US ambassador to India, David C Mulford that India must allow more than 50 per cent FDI in insurance sector and termed it as “unwarranted”.  It stated that what was more objectionable was the threatening tone of the ambassador and felt it was a clear pressure tactic adopted by the United States to force further liberalisation of Indian insurance sector.

In a statement released from Hyderabad, AIIEA general secretary, K Venugopal said the US demand had more to do with the needs of US insurance industry than the national requirements of India.  “It is a fact that US insurance industry is stagnating. Its life premium registered a meagre growth of 0.1 per cent in 2004.  Its non-life industry is in a serious crisis due to the recent natural calamities.  Therefore, it wants to penetrate and gain control over the Indian insurance sector, which is growing at a phenomenal rate of around 40 per cent.

“Insurance sector is very vital to the mobilisation of funds for infrastructure and social development.  According to the prime minister, India needs Rs 7,00,000 crore in the next 10 years for infrastructure development.  It is absurd to expect that the foreign companies will bring their global premium into Indian infrastructure.  The experience of the last five years since opening of insurance sector proves that foreign companies have not invested in infrastructure even the premium locally mobilised. On the other hand the Life Insurance Corporation of India (LIC) alone is capable of mobilising the required funds in just seven years.

“Mulford said that the current minimum capital requirement of Rs 100 crore capital should be reduced to encourage more health insurance companies to enter the Indian market. But it is a known fact that the private companies which entered the general insurance sector are concentrating on the profit making portfolios of Fire and Marine insurance leaving the social insurance needs like health insurance to be taken care by the public sector general insurance companies.  

AIIEA demanded from the UPA government to strengthen the nationalised insurance industry and warned it not to succumb to the pressures of the United States.  It reiterated its firm opposition to any hike in the FDI in insurance from the present 26 per cent.  The insurance employees will observe a nationwide one-day strike if the government attempts to bring any legislation hiking the FDI limits in insurance, stated Venugopal. He also asserted that the AIIEA will mobilise the people to oppose the US pressures and government’s actions if any, taken under this pressure.  Saying that the hike in FDI in insurance will be a disaster to the national economy and will retard the infrastructure development, the AIIEA solicited the support of the Indian people in this struggle.