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Meet with captains amid growth glitch

Mukherjee: Seeking views

Our Bureau

New Delhi, June 13: Finance minister Pranab Mukherjee will meet some leaders of Indian industry on June 26 to discuss steps to rejuvenate the manufacturing sector and the economy.

“Top industry leaders who will be attending the meeting (on June 26) will include Mukesh Ambani, Anil Ambani, Ratan Tata, Sunil Bharti Mittal and Y.C. Deveshwar,” said a top official in the finance ministry.

The proposed meeting comes in the backdrop of industry reporting just 0.1 per cent growth in May, with the capital goods sector reporting a negative growth of 16.3 per cent, indicating diminishing industry appetite for investment. Overall growth, too, has slackened. Quarterly growth in January-March was 5.3 per cent, the lowest in nine years.

“The finance minister will hear their concerns and see how they can be addressed,” the official added.

The meeting called by Mukherjee, the official said, will be a follow-up of a conference held in August last year to provide a boost to manufacturing.

Meanwhile, Mukherjee today met chief executives of public sector insurance companies to discuss ways to turn profitable amid rising concerns on the slackening performance of the state-owned insurers.

“Except for United India Insurance Company, none of the public general insurers have made enough profits for declaration of dividend to the government. The main reason is the losses incurred in motor, fire and health insurance,” a finance ministry official said.

The four state-owned general insurance companies — New India Assurance, National Insurance, Oriental India Insurance and United India Insurance — have been facing huge underwriting pressure since 2007 when prices were freed.

While United India reported a profit of just Rs 307 crore in 2011-12, New India Assurance, the country’s largest general insurer by premium, recorded a Rs 422-crore loss.

“A reorganisation of the existing loss-making branches, especially those of non-life general insurance companies and also decongestion of branches which are concentrated in metros, can help this expansion in unserved areas,” said Mukherjee at the meeting.

Mukherjee also discussed strategies to disburse unsettled claims of the Life Insurance Corporation of India.

In December 2011, the income tax department had issued a notice to the LIC, demanding Rs 9,000 crore on a Rs 37,000-crore entry treated as “negative reserves” in the company’s balance sheet.

Another issue on the agenda was high provisioning for the third-party motor pool, which led to declining profits last year. The insurance regulator had raised provisioning rates for the third-party motor pool.

The finance minister further advised prudent and cautious underwriting of claims in motor, fire and health insurances as well as improving the pricing of these products.

The ministry also called for reviewing operations of the foreign branches of the general insurers.