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Bill to raise FDI limit in insurance sector
Raise CAA, S-400 deal with India
Supplementary demand for grants passed by Loksabha
Bill to raise FDI limit in insurance sector
Context: The Rajya Sabha passed the Insurance Amendment Bill, 2021 that increases the maximum foreign investment allowed in an insurance company from 49% to 74%, amid criticism from the Opposition parties on the clause enabling “control and ownership” by foreign investors.
Foreign investment
- The Act allows foreign investors to hold up to 49% of the capital in an Indian insurance company, which must be owned and controlled by an Indian entity.
- The Bill increases the limit on foreign investment in an Indian insurance company from 49% to 74%, and removes restrictions on ownership and control.
- However, such foreign investment may be subject to additional conditions as prescribed by the central government.
Investment of assets
- The Act requires insurers to hold a minimum investment in assets which would be sufficient to clear their insurance claim liabilities.
- If the insurer is incorporated or domiciled outside India, such assets must be held in India in a trust and vested with trustees who must be residents of India.
- The Act specifies in an explanation that this will also apply to an insurer incorporated in India, in which at least:
- 33% capital is owned by investors domiciled outside India, or
- 33% of the members of the governing body are domiciled outside India.
Raise CAA, S-400 deal with India
Context:Saying the Indian government is moving away from democratic values, the Chairman of the Senate Foreign Relations Committee has written to U.S. Secretary of Defense asking him to raise concerns about democracy and India’s purchase of the S-400 Russian missile defence system, during his visit to New Delhi.
Deteriorating situation of democracy
- S. Secretary of Defense is expected to meet Defence Minister and senior national security officials between March 19 and 21 when he is in New Delhi.
- Among his concerns, he cited crackdown on journalists and critics of the government, its handling of the farmers‟ protests and the use of sedition laws, and the Citizenship (Amendment) Act (CAA).
- The Indian government’s ongoing crackdown on farmers peacefully protesting new farming laws and corresponding intimidation of journalists and government critics only underscores the deteriorating situation of democracy.
- Moreover, in recent years, rising anti-Muslim sentiment and related government actions like the Citizenship (Amendment) Act, the suppression of political dialogue and arrest of political opponents following the abrogation of Article 370 in Kashmir, and the use of sedition laws to persecute political opponents have resulted in the U.S. human rights group Freedom House stripping India of its ‘Free’ status in its yearly global survey.
CAATSA sanctions
- India’s purchase of S-400 for just under $5.5 billion could attract sanctions under a 2017 law, the Countering America’s Adversaries Through Sanctions Act (CAATSA).
- The Trump administration’s repeated message was that sanction waivers are not automatic and decided on a case-by-case basis.
- Congress forced the Trump administration’s hand in December last year by requiring it to sanction Turkey for purchasing the S-400.
- In 2018, China was sanctioned for purchase of Russian equipment.
- While India is not a treaty ally of the U.S. and is increasing its purchase of U.S. arms – mitigating circumstances as per U.S. law – the Chairman of the Senate’s letter suggests that sanctions are still, at least in theory, an option as India is expected to take delivery of the S-400 later this year.
- India’s planned purchase of the Russian S-400 missile defense system is also a matter of concern .
- They recognize that India is not a U.S. treaty ally and has historical ties with the Soviet and Russian militaries.
Supplementary demand for grants passed by Loksabha
Context:Recently, The Lok Sabha passed the supplementary demand for grants
Supplementary Grants
- It is granted when the amount authorised by the Parliament through the appropriation act for a particular service for the current financial year is found to be insufficient for that year.
- It is specified by the Article 115 of the constitution of India, along with Additional and Excess Grants.
Other Grants:
- In addition to the budget that contains the ordinary estimates of income and expenditure for one financial year, various other grants are made by the Parliament under extraordinary or special circumstances.
- Apart from Supplementary Grants, these include:
- Additional Grant: It is granted when a need has arisen during the current financial year for additional expenditure upon some new service not contemplated in the budget for that year.
- Excess Grant : It is granted when money has been spent on any service during a financial year in excess of the amount granted for that service in the budget for that year. It is voted by the Lok Sabha after the financial year. Before the demands for excess grants are submitted to the Lok Sabha for voting, they must be approved by the Public Accounts Committee of Parliament.
- Vote of Credit: It is granted for meeting an unexpected demand upon the resources of India, when on account of the magnitude or the indefinite character of the service, the demand cannot be stated with the details ordinarily given in a budget. Hence, it is like a blank cheque given to the Executive by the Lok Sabha.
- Exceptional Grant: It is granted for a special purpose and forms no part of the current service of any financial year.
- Token Grant: It is granted when funds to meet the proposed expenditure on a new service can be made available by reappropriation. A demand for the grant of a token sum (of Re 1) is submitted to the vote of the Lok Sabha and if assented, funds are made available.
- Reappropriation involves transfer of funds from one head to another. It does not involve any additional expenditure.
- Votes on account, votes of credit and exceptional grants are specified in Article 116 of the constitution.
- Supplementary, additional, excess and exceptional grants and vote of credit are regulated by the same procedure which is applicable in the case of a regular budget.