AA Edit | Govt Must Tread Cautiously On Insurance, Nuclear Bills
It must be recalled that India had nationalised life insurance, and the Life Insurance Corporation of India was formed only after several private insurance companies shut their shop
Two bills that the Lok Sabha passed on December 17 will have a far-reaching effect on the common man and woman in the decades to come. One bill aims at allowing foreign companies to set up a fully-owned subsidiary to sell insurance products in India, while the other seeks to allow private companies to set up nuclear power plants and also reduce the liability of nuclear equipment makers in the unfortunate event of a nuclear accident.
In the modern world, where the social security that joint families offer has almost eroded, insurance plays a crucial role in the well-being of a family. As such, insurance companies must command an exceptional level of public confidence because the insured person needs to trust the insurance company to fulfil its financial obligation if they are no longer alive.
It must be recalled that India had nationalised life insurance, and the Life Insurance Corporation of India was formed only after several private insurance companies shut their shop. Events of a similar pattern happened in the general insurance business. However, people gained confidence in insurance companies after the nationalisation and insurance penetration, though slow, picked up pace. Though the government allowed private insurers in 2000, it insisted on local partners having a major stake to ensure stability.
With the Lok Sabha passing the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, the government lifted the safety valve that was in place for 25 years, allowing 100 per cent foreign investment in the insurance sector. This step will attract global insurers either to set up a new business or take over the existing business, resuming the much-needed dollar flow in the country and creating new jobs. However, the government must ensure that the fight for market share among the insurers does not end up eroding people’s trust in insurance.
Similarly, the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Bill, which allows private companies to run small modular nuclear reactors to produce power and reduce the liability of equipment makers, will also have a long-term effect.
On the positive side, it will increase power production in the country exponentially. When data centres for artificial intelligence — which is set to herald a new wave of industrialisation in the world — have become power guzzlers, India cannot remain a power-deficient nation and squander the opportunity to benefit from the new technological change. The reform will bring in capital and initiative to the nuclear power industry, bringing in dollars as well as jobs.
On the flip side, however, nuclear power in the hands of private companies, whose sole motive is profit maximisation, raises concern over potential nuclear hazards in the world’s most populated country. The recent IndiGo crisis is an example of the profit-driven pursuit of private companies. If something similar occurred in the nuclear industry, lakhs of people would pay for the mistake with their lives.
The government must tread with caution on the implementation, as these two bills will decide how it will be remembered by posterity.