RPT-UPDATE 2-Indian parliament to debate financial reform bills

(Repeats story from Wednesday) (Adds quote, background)

By Bappa Majumdar and Manoj Kumar

NEW DELHI, Nov 18 (Reuters) - India's government has set reform of the insurance sector as a priority for the winter parliament session that begins on Thursday, with investors keen to get a gauge of the political appetite for change.

The Congress-led coalition won re-election with a stronger mandate in May, raising hopes of quick action on delayed reforms, but it has moved slowly and is still answerable to a reform-shy rural base and faces political opposition to rapid change.

Prime Minister Manmohan Singh said recently India is ready to increase the pace of reform, [ID:nBOM425840] and the government has flagged stake sales in state firms and tax changes to help to plug a large budget deficit. [ID:nDEL13395]

"The insurance bill has always been a top priority," Junior Parliamentary Affairs Minister Prithviraj Chavan told reporters on Wednesday.

The bill, which was stalled in the last parliament, proposes raising the foreign investment limit in insurance companies from 26 percent to 49 percent."

The government also wants to open up the pension sector to private and foreign firms and give equal voting rights to foreigners in private-sector banks, which are currently limited to 10 percent irrespective of their actual holding.

Bills take time to pass in India and progress in key sectors could drag. Any substantial move on insurance or pensions would send a signal of a renewed effort to modernise the economy.