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Friday 9 December 2011

House panel kills 3 key reform bills

House panel kills 3 key reform bills
TNN | Dec 9, 2011, 05.11AM IST

NEW DELHI: In a major setback to the UPA government still smarting
from the FDI in multi-brand retail fiasco, Congress MPs joined
opposition members in Parliament's standing committee on finance to
reject three major bills relating to unique identification numbers,
banking and insurance on Thursday.

The finance panel felt the UID Authority suffered from serious
deficiencies over duplication of work with the registrar of census
while it turned down the banking bill seeking to give investors in
banks voting rights commensurate with their shares instead of the 10%
cap at present.

The committee felt voting rights could be increased to 26% and no
further while with regard to insurance, it felt there was no case to
revise the foreign investment limit from 26% to 49% as proposed by the
government. There was hardly a murmur of dissent with only Congress MP
Rashid Alvi suggesting the UID bill be returned to government and not

The concurrence of Congress MPs on the panel with the reports is
revealing as it points to a nervousness about FDI in various sectors
in the ruling party at a time when the Manmohan Singh government is
keen to beat back the "policy paralysis" charge with some vigorous

However, the Congress leadership remains committed to the UID scheme,
with Rahul Gandhi telling a delegation on Thursday that UID would help
in funds reaching the intended beneficiaries and also check

Apart from Alvi, Congress MPs on the panel include K S Siva Rao,
Sambasiva Rayapati, Magunta Reddy, Sathyanarayana Sarvey, Dharam
Singh, Manicka Tagore, Anjan Yadav, Jawaharlal Darda and K V P Rao. A
Left MP submitted a note demanding that voting rights of investors in
bank remain at 10%.

While the government has the option to reject the reports, it will
find it hard to ensure passage of the bills in Rajya Sabha where the
BJP and Left can come together to block the legislations. The lack of
enthusiasm within the Congress will also be a source of concern for
government managers looking to recover ground they lost to opposition
over FDI in retail where a retreat looks like a rout.

The panel's decisions on the important banking and insurance bills
threaten to take the wind out of government's reforms agenda. While
discussing the banking bill, MPs felt the government must reconsider
its proposal on giving voting rights to investors equal to their

The MPs felt that putting a cap on voting rights at 26% would be
appropriate at this juncture which can be reviewed at a later stage,
sources said. The members, however, agreed to keep bank mergers
outside the purview of the Competition Commission.

On the issue of UIDAI Bill, members pointed out inconsistencies in the
government's stand with several ministries raising objections on
execution and finances of the project. The MPs raised objection on no
singular authority mandated to enroll all citizens for the Unique ID
project. While UIDAI is mandated to enroll up to 20 crore in the first
phase, the registrar general has also been asked simultaneously to
enroll for UID card.

Objections over UIDAI bill

# UIDAI has a limited mandate to enroll up to 20 crore, beyond that
will be taken up by the registrar general. It is duplication of work.

# Planning Commission and finance ministry has raised objections on
large funding required by the UIDAI.

# Home ministry has valid concerns on UID card causing security threat
as they are without verification.

Objection over Insurance bill

No need to raise FDI cap from 26% to 49%

Objection over Banking bill

Objection: There should be no change in voting pattern for a foreigner
beyond 26% of his shareholding.

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