The union cabinet has decided to put on hold the proposed merger of the three state-run general insurers even as it approved ₹12,450 crore in capital infusion.
It cleared the extension of the scheme to provide free food under the Pradhan Mantri Garib Kalyan Ann Yojana till November and other elements of the Atmanirbhar package announced earlier.
The government had in the budget for FY19 announced its decision to merge three general insurance companies – Oriental Insurance Company Limited (OlCL), National Insurance Company Limited (NICL) and United India Insurance Company Limited (UIICL).
The cabinet also cleared an increase in the authorised capital of these companies to allow capital infusion and enable them to raise funds.
In a statement after the cabinet meeting, the government said “given the current scenario, the process of merger has been ceased so far and instead, focus shall be on their solvency and profitable growth, post capital infusion.”
The ₹12,450 crore capital infusion includes ₹2,500 crore provided in FY20. The insurers will be provided ₹3,475 crore immediately while the balance ₹6,475 crore will be infused later.
“The re-capitalisation will make them more stable,” union minister Prakash Javdekar said at the cabinet briefing on Wednesday.
The boards of three firms have already approved the merger in January, but the process slowed subsequently. The government said it has issued guidelines aimed at bringing business efficiency and profitable growth while ensuring optimum utilisation of the capital being provided.
Affordable Rental Houses
The cabinet has also given approval for developing affordable rental housing complexes (ARHC) for urban migrants and poor as a sub-scheme under Pradhan Mantri Awas Yojana – Urban.
It is estimated that 1.08 lakh such houses are ready to be rented out across 107 cities and the government aims to develop 3.5 lakh of them over the next few years. Under the scheme, the existing vacant government-funded housing complexes will be converted in ARHCs through concession agreements for 25 years.
Besides, special incentives like use permission, 50% additional FAR/FSI, concessional loan at priority sector lending rate and tax reliefs at par with affordable housing will be offered to private and public entities to develop ARHCs on their own available vacant land for 25 years.
Other decisions
The cabinet also cleared a number of already announced decisions such as extension of free food scheme and the extension of government contribution of 12% each of the employees’ and employers’ to the provident fund accounts for June-August under Pradhan Mantri Garib Kalyan Yojana.
Free cooking gas will be provided for another three months beginning July 1 under the scheme for the poor and vulnerable.
The cabinet has approved the scheme for an agriculture infrastructure fund to provide debt financing for investment in viable projects for post-harvest management infrastructure and community farming assets.
Source: Economic Times