Big boost to insurance, GST reforms

Two long-pending key economic reforms, the single goods and services tax (GST) and permitting 49% composite foreign equity investment in insurance companies, got a big boost on Wednesday.

The select committee of the Rajya Sabha overruled dissent from four members and gave its approval to the amended insurance legislation. The cabinet, later in the day, approved the Insurance Amendment Bill, incorporating the amendments suggested by the panel, for presenting the draft legislation in Parliament.

Later, addressing the debate on the supplementary budget demands, finance minister Arun Jaitley took a big step to bridge the trust deficit with states on GST by committing to pay out this financial year Rs.11,000 crore in part settlement of the central sales tax (CST) compensation dues. The announcement is even more significant because it comes a day ahead of his meeting with state finance ministers.

The passage of insurance reforms will improve sentiment among foreign investors, especially because it has become a litmus test of the ability of the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) to steer legislation through the Rajya Sabha where it is in a minority.

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