Raise insurance, retail FDI: Survey

Facing a possible slowdown in the wake of a sluggish growth in developed economies, especially in the US, the Economic Survey suggested on Thursday a series of reforms, including hiking FDI in insurance and retail sector, to sustain the 9 per cent rate of economic expansion.

Raising growth to the double digit will require additional reforms in the backdrop of appreciating rupee, slowdown in the consumer goods segment of industry and infrastructure, said the Survey tabled in Parliament.

"Raise foreign equity in insurance to 49 per cent," it said, while also prescribing 51 per cent foreign equity in insurance companies providing all types of insurance like health and weather in rural areas.

The United Progressive Alliance regime had proposed raising the FDI cap in its first budget in 2004-05, however, opposition from the Left parties eluded consensus on the issue and has been

referred to a GoM headed by External Affairs Minister Pranab Mukherjee.

The Survey also asked the government to complete divestment of 5-10 per cent stake in previously identified profit making non-Navratna PSUs.

On the banking sector, the Survey suggested a 100 per cent FDI in greenfield private rural-agriculture banks. Such a bank would be free to set up any number of branches in any rural or semi-rural area, the Survey said, adding that it would be free to lend agriculture and allied sectors anywhere in the country and to any industry located in non-urban area.

While advocating FDI in all retail trade, it said allow 100 per cent foreign equity in foreign branded, specialised retail chains like luxury brands, consumer durables and semi durable.

• Economic Survey 2007-08: Complete Coverage