Chennai, Oct 6 (IANS): Tamil Nadu Chief Minister J. Jayalalithaa Saturday termed the UPA government's decision to increase FDI limit in the insurance sector to 49 percent from the current 26 percent as diversionary and more to anaesthetise the corruption charges against it.

"The UPA government is unfazed by the sufferings of the common people, small traders and small farmers. The latest FDI flag is diversionary - more to anaesthetise the mammoth corruption charges against it, especially when elections seem imminent," she said in a statement.

Jayalalithaa added that it was premature to say the Thursday's cabinet approvals on foreign direct investment in insurance and pension sectors would accelerate unprecedented growth and boost a sagging economy.

"Increasing FDI in the insurance sector and opening up foreign investment up to 26 percent in pension funds will be operational only if the relevant bills - Pension Fund Regulatory and Development Authority (PFRDA) Bill, 2011 and Insurance Law (Amendment) Bill, 2008 - are passed by both the houses of parliament where the UPA faces a number crunch," she said.

Nothing appreciable has happened with the 26 percent FDI in the insurance sector and hiking it to 49 percent will prove disastrous, according to her.

She said the central government's decision to limit the start-up capital for standalone health insurers at Rs.50 crore would result into the mushrooming of small companies lacking experience and capability and would be fraught with danger.

"Allowing FDI into pension funds and channelling the savings of elderly persons into the highly risky and unpredictable capital market will place the future of senior citizens at tremendous risk," Jayalalithaa added.

Calling the decisions as a gimmick and at worst an unworthy risk, Jayalalithaa said: "The act of disguising harmful decisions and promoting them under the name of grand reforms amounts to deceiving the people of the country."