India confident of pension, insurance reforms

30 January 2007

London: India has said that it was confident of pushing through reforms in the insurance sector to allow greater foreign ownership as also the pension sector, as it seeks more overseas investments to sustain high growth.

Finance minister P Chidambaram told the Indo-British partnership network in London yesterday that the government was confident of mustering broad-based support for the pension fund regulatory and development authority bill as well as a bill for allowing greater FDI in insurance.

"Given patience and time, these bills will become law," Chidambaram said, adding that the government had to move cautiously in view of reservations expressed by some coalition partners.

The government wants to reform the pension sector to allow the Employees provident Fund Organisation, which manages the pension fund contributions, to invest five per cent in equity markets to earn better returns for its over 40 million subscribers.

The move becomes necessary as the current pension fund returns of 8 .5 per cent per annum would lead to a deficit of Rs450 crore while the employee unions want it raised to 9.5 per cent.