By Onkar Nath:
I am simply putting forth the opinion of the common people of this country. I am not an economist, nor do I have a background in finance or the insurance sector. My opinion is based on my observations, after watching debates on television and reading in the newspapers about Foreign Direct Investment (FDI) in pension and the insurance sector.
I would not deny the fact that after the economic liberalization in India during the 1990s, we have seen lot of economic prosperity in our society and FDI was one of the major driving forces behind it. FDI brings in capital, creates a market, jobs, higher wages, competition, innovation, infrastructure, technical knowledge, all of which are the main motivators of economic prosperity. FDI breaks the boundaries of the market and creates only one market, a global one. However, one should also be cautious that an exposure to the global market has its own risks, one of which is a global downturn, which is happening right now.
Coming back to the topic of FDI in pension and insurance, I see it as a positive signal for a country like India which urgently requires a huge amount of investment. FDI in these two sectors will open the doors for foreign companies to enter the vast market of India with its 1.2 billion people. The figure is huge. It is a known fact that companies want to tap new markets instead of offering their products to saturated markets in developed countries. Domestic companies, who are struggling to survive in the market will benefit after collaborating with foreign companies. We can see that our state-run insurance companies are suffering and are in poor economic conditions. They need capital to expand their business to offer the best quality of plans and products to the consumer and this is where foreign companies will play their role i.e. in providing capital. Finally the biggest advantage is with the consumer. Consumers like us will get a variety of options to choose from and we can avail the best plan at the cheapest possible rate. I also assume that FDI in these two sectors will also change the way agents are working right now. I personally observed that agents who are selling pension and insurance are not well-trained or skilled and most of the time, consumers like us end up buying unsuitable plans from them. Large amounts of money is being invested by middle class families without knowing as to what kind of benefit their purchased plans are going to give. I think this trend will change drastically.
I would also like to say that anything which has advantages also has disadvantages. I am confident that an effective regulatory body has to play an important role here. They will ensure that all the rules and regulations laid by government are being followed by multinational companies. I would also like to point out that those political parties who are opposing the FDI should prove the disadvantages of the same and let the people choose what is right and wrong. On some TV channels, the government counts the advantages of FDI and at the same time if you switch to other channels you will see the opposition parties counting the disadvantages. We are bound to get confused after watching all these. Ultimately it is the people who have elected them and it therefore is the responsibility of the representatives to openly present the advantages and disadvantages of any policy be it the FDI or other bills.
In this regard, I would like to point out that I firmly support the format of the Presidential elections in America where you have to openly debate on each and every issue and let people judge as to which party has good plan for taking their country one step further.