COMMENTARY
INTERVIEW
SPECIALS
CHAT
ARCHIVES

'Economic reforms divorced from a larger concept of a moral universe and a national impulse will dilute our sovereignty'

Last fortnight, the I K .Gujral government faced a major embarrassment when it was forced to withdraw the Insurance Regulatory Authority Bill in Parliament after realising that it was sure to fall through. This was not only a setback for the UF government, as a whole, but for Finance Minister PChidambaram, in particular, who had set great store by the passage of the Bill.

Clearly the government had miscalculated the support for the Bill in the House. And one possible reason why it was misled was the Bharatiya Janata Party's refusal to back the Bill even after giving the impression earlier that it was ready to go along.

Did the BJP really change its mind at the last moment? Jaswant Singh, the BJP's finance minister in its 13-day government at the Centre, clarifies the party's position and articulates its opposition to the entry of foreign insurance companies into India.

Did you, or, in your knowledge, anyone else give any assurance to the finance minister that the IRA Bill would be supported?

The finance minister certainly spoke to me about certain amendments moved by two or three BJP members. I explained the BJP's position -- which I repeated in Parliament -- as stated in its election manifesto.

Firstly, we advocate an opening up to Indian entrepreneurs. Secondly, we do not favour the entry of multinationals in the field. Transnational insurance companies with much greater financial clout would prevent the growth of a vibrant indigenous Indian insurance industry.

And, so far as an IRA is concerned, we believe that a multi-member body is needed. When I enunciated all this, the finance minister had no difficulties and said he'd be satisfying the House in regard to foreign participation in this sector. This conversation certainly took place.

What was sought was an assurance that there was no intention to permit entry of transnational corporations in this sector under the guise of the IRA Bill.

Did he take what you said to him to be an assurance?

It will be difficult for me to say what the finance minister assumed. To be fair to him, I will say that discussion on the Bill followed a comprehensive discussion in the standing committee where all parties are represented. All parties had given the go-ahead except the CPI-M's (pauses)...

...Biplab Dasgupta, who gave a dissent note.

Yes, it is therefore for the finance minister to draw such conclusions as he did.

Without being unfair, I do not think legislation in Parliament and its enactment is the responsibility of any single minister. It is the government of the day that brings forward the legislation. A minister simply pilots it.

And, it is not for anyone in government to point out that a failure to steer safely the passage of a Bill through parliamentary passions is that of the Opposition, which suggestion is disingenuous, to say the least. I think the BJP continued to play its role as the Opposition with caution, with restraint and with responsibility.

In any case, this government is an artificial construct sustained in office by the wholly questionable device of support from outside.

In the standing committee of Parliament, there was no opposition of the Bill by the BJP.

This aspect of foreign intervention was raised by the BJP and it was answered to their satisfaction. But you must understand that committees are an aid to deliberations on the floor of the House. They are not an alternative or a replacement. The role, duties, functions of Parliament are facilitated, not pre-shortened, by a committee.

Are you personally opposed to foreign capital?

As a party functionary my views become subservient to party views. In its election manifesto of 1996, the BJP has stated its preference for (a) long-term capital in (b) high-tech areas.

If we improve our regulatory mechanism and the financial services sector, we can absorb more capital than has been presently demonstrated.

But you have just killed one regulatory Bill. And usually insurance and pension funds come as long-term capital.

When you talk of long-term capital, you have to examine the role of insurance. Banking is natural to India. Insurance is not. Only 5.6 million out of a population of 900 million -- or less than .5 per cent -- have life insurance because of the inefficiency of LIC and also due to cultural resistance to insurance.

Foreign insurance companies with more investable resources are looking at that enormous market of 900 million. If even a third of this population is covered, look at the enormous benefits that would accrue.

These benefits must not go out of India. At a coverage 0.5 per cent, LIC sits on a treasure store of nearly Rs 500 billion which is not efficiently utilised. Imagine the treasure if 30 per cent of India were covered.

The cultural and institutional resistance can be broken by breaking the State monopoly. Indian entrepreneurs should be allowed in. But foreign money...? No.

You are one of the few liberalisers left in your party which is increasingly becoming swadeshi. Are you an endangered species?

I do not think so. Economic reforms divorced from a larger concept of a moral universe and a national impulse will dilute our sovereignty. Swadeshi in essence is a voice against precisely such blurring of lines of economic sovereignty.

It would also be a great error to think that unalloyed capitalism is an answer for a nation like India. We might or might not be a poor country but we are a country of the poor. At least 350 million people cannot feed themselves. The fashionable words of today -- globalisation, market forces, etc -- do not mean, in the Indian context, an abolition of the State. What the nature of that State ought to be and whether the Indian state has the required attributes are different inquiries.

Kind courtesy: Sunday magazine

EARLIER REPORTS:

Blow to reforms as insurance bill is withdrawn
Govt open to insurance cover for investors
Govt introduces bill