HVK Archives: Insuring the future - Restrict entry of foreign companies
Insuring the future - Restrict entry of foreign companies - The Times of India
K R Malkani
()
December 8, 1998
Title: Insuring the future - Restrict entry of foreign companies
Author: K R Malkani
Publication: The Times of India
Date: December 8, 1998
In 1963 - after the war with China - we were not in the best of
shape. In that situation of weakness, the US pressed us to let
it install a high-powered transmitter in India, to be used
during peak hours by the US, and, during lean hours, by us. When
this agreement became public, there was a furore in the country.
Pandit Nehru quickly discarded the agreement.
This time too, under persistent western pressure, New Delhi
agreed to open the insurance sector to foreign business. But now
that public opinion on the subject has expressed itself in no
uncertain terms, it is to be hoped that the government will
correct its course.
If foreign insurance companies were good for India, we ourselves
would have asked for them long ago. But the fact is that it is
the foreign companies, backed by their respective governments,
which have been insisting on invading our economy. Over the
years, under western pressure, various governments were more
than half inclined to open insurance to foreign behemoths. But
they were afraid that nationalists and leftists would not let
that happen.
Only last year, the then finance minister actually introduced
the Insurance Regulatory Authority Bill in the Lok Sabha,
opening insurance to the private sector and foreign sector. The
BJP, even at that time, was the largest party in the House.
While a tiny group in the BJP Parliamentary party was willing to
go along with that Bill, the bulk of the members made it clear
that while there was no objection to privatisation,
'foreignisation' (if I may coin that word) was not on. In this
situation, Mr Chidambaram withdrew his bill to avoid defeat.
Out of Character
In the general election earlier this year, the BJP manifesto
reiterated its position when it said: "The broad agenda of the
BJP will be guided by swadeshi or economic nationalism." The
National Agenda of the BJP & Alliance Partners also said: "We
will continue with the reform process, give it a strong swadeshi
thrust to ensure that the national economy grows on the
principle that 'India shall be built by Indians'." In this
situation, the Cabinet's sudden decision to open India to
foreign insurance companies was out of character and un-called
for.
The LIC - and GIC - are working well enough. For 1995-96, LIC
had a total income (from premia and investments) of Rs 22,046
crores. GIC had a net premium of Rs 5,956 crores. During the
last 15 years, LIC income has been growing at a healthy ten plus
per cent a year - as against 6.7 per cent in the rest of Asia;
3.4 per cent in Europe and just 1.4 per cent in the US. (LIC has
even provided insurance cover to 50 lakh people living below the
poverty line, with 50 per cent subsidy in the premium rates.)
The LIC settlement of claims ratio at 95 per cent is also way
beyond international averages. Even the GIC claims settlement of
74 per cent is way ahead of the international average of 40 per
cent.
"Free Enterprise"
It could be argued that our insurance corporations could perform
still better if there were competition. In that case, we can
open insurance to Indian private enterprise. But why expose our
insurance business to foreign assaults? The US has over 3,000
insurance companies. Most of them are incurring losses. And in
recent years, over 300 of them have gone bankrupt. The US
congressional committee dealing with insurance, headed by
Senator John de Dingell; has stated: "The annual yellow
financial report filed by insurance companies with state
commissioner is often called yellow peril because of its dubious
reliability. Time magazine reports: "Like financial lepers,
insurance firms have been widely shunned by most investors in
the USA."
It is being touted about that foreign insurance companies will
bring in foreign investment. They will not. If they have the
money and the mind - to invest, they can do so even now. But why
do they have to infest our healthy insurance business on the
doubtful promise of future investment?
The fact of the matter is that with their advertising blitz,
they will take away business from LIC and GIC, control Indian
savings and control even our pension and provident funds. They
will give fancy salaries to the favoured few and, for the rest,
replace men by machines. The American Insurance group with its
capital base of $ 135 billion can easily afford to undercut
losses for years till LIC and GIC are wiped out. At that stage,
it can raise the premium rates and exploit its monopolistic
position to bleed customers. Even their rating agencies like
Standard & Poor and Moody will conspire with them to give them
top ratings even in their year of collapse.
But in the name of "free enterprise", they will refuse to invest
in government securities and thus starve the Indian government
of funds for its social programmes. (LIC invests 70 per cent of
its funds with the government.) And then in the name of
'globalisation' they will take away thousands of crores in
foreign exchange as 'profits'.
Already foreign banks, operating only in big cities, are taking
away Rs 1,000 crores a year as profits. India must require
foreign banks to meet the social obligations that are being met
by Indian banks - or get out. There must be a level playing
field - and we cannot put foreign companies on a pedestal.
Western Domination
Every country protects its economy and its savings. In the US,
the insurance industry enjoys special protection. Germany and
France have banned the import of foreign insurance for domestic
risks. Switzerland has kept out foreign insurance companies
totally. As Mr Jose Ripoll, a former deputy chief of insurance
of UNCTAD says, "Open market for insurance business is a myth."
The Asian tigers who opened up their economy too fast are today
no more than little cats. Only India and China, who decided to
hasten slowly in the matter, are in a relatively better economic
shape.
In the name of 'liberalisation' and 'globalisation' under the
rubric of 'World Trade Organisation' (which is actually the
West's Trade Organisation), the West is only trying to further
penetrate Third World economics, firmly control Third World
countries and perpetuate absolute western domination of the
world. That must not be allowed. For what is at stake is not
just the insurance business. It is the future of India.
(The author is a BJP MP)
Back
Top
|
