New Delhi, March 13 (KNN) The passage of the insurance bill in Rajya Sabha is being hailed as a major win for the nine-month old Narendra Modi government. Foreign companies will now be able to buy up to 49 per cent stake in domestic insurance companies.
 
The insurance bill sailed through Rajya Sabha on Thursday, where Prime Minister Modi's government is in a minority, bolstering hopes that the government may be able to push other key reform legislations in Parliament.
 
The insurance bill is the perfect example of how excruciating the pace of economic reforms in India can be. The bill was first introduced in 2008, but was opposed by Left parties and even the BJP. Parties have been opposed to the insurance bill despite the fact that the controlling stake in insurance firms would remain with Indian promoters. Its passage, more than six years after it was first introduced, will improve India's visibility among foreign investors.
 
Global insurers such as Britain's Prudential, which holds a minority stake in India's biggest private life insurer ICICI Prudential Life, will now be able to increase their stake. According to Minister of State for Finance Jayant Sinha, foreign capital to the tune of Rs. 25,000 crore is likely to flow into the insurance sector. SBI's Arundhati Bhattacharya expects an "immediate" inflow of Rs. 20,000 crore.
 
According to Nomura, the passing of the insurance bill will result in higher FDI inflows, which should over time encourage a stable source for financing the current account deficit. (KNN/DB)