The most important economic event of the country is round the corner. Yes, we are talking about the annual budget that gives direction to the economy of the country, that helps the businesses to decide on their strategies and that is single-handedly responsible for ensuring the growth of the country. There are arguments against budget being so vital and its relevance should only be to discuss government’s earnings and expenditures. The fact is India is not yet an economy on an auto-pilot mode where government can just be the facilitator. Here, it is still responsible for major policy decisions and steering the economy through choppy waters.
With so much of responsibility, the expectations from the government goes sky high during the budget season as it impacts virtually every business sector and every citizen of the country in numerous ways. From the insurance sector’s perspective, there are certain expectations from the budget of this year as well. We’ll soon know if those are met or not.
For the moment, let’s see what does the insurance sector needs the most at this point of time:
1) FDI In Insurance
Last year the government had taken some firm steps as far as FDI is concerned, but more needs to be done as there is a substantial interest in the general insurance as well as reinsurance sector in the country. Liberalising FDI regulations for the sector will bring in more investment that can help the sector to grow. This in turn can help fuel investments in infrastructure and banking sector with insurance sector being one of the major investors.
2) Insurance Awareness
Insurance companies are running huge advertising campaigns to make citizens aware of their insurance plans and to entice them to buy them. However, there are still massive challenges when it comes to penetration of insurance deep inside the country. Due to low awareness levels, people do not invest in insurance products until and unless there is a calamity or some personal tragedies. In short, insurance is bought more as a reaction to a crisis rather than a preventive cure. The government needs to run major campaigns to raise awareness levels amongst citizens so that each and every individual buys either an individual or a family plan, even if on a small investment basis. A basic insurance coverage for every individual is the call of the day and everyone needs to do their bit to make it possible.
3) Tax Benefits In Health Insurance
There are fixed tax benefits given in the form of tax exemptions for every health plan purchased in the country. However, the limits are quite low and they don’t come across as an attractive reason for investment. Raising the exemption in insurance premium will propel many more people to buy health insurance policies. It is an absolute must given the medical infrastructure we have as health insurance can provide cover to the poorest sections of the society. It can also help many people avoid going below poverty line in their quest for adequate medical treatment.
4) Tax Benefits For Home Insurance
The realty sector is poised for a growth this year onwards and many more citizens will be moving towards buying their own homes. The interest rates are falling and if there can be an income tax exemption given to the premium paid towards home loans it will give a massive boost to sector. Also, it would be a great move if the law makes getting home insurance compulsory for a basic sum assured. This would work in two ways: firstly it would get insurance sector tremendous business potential and secondly the home buyers will feel safe enough to face any unforeseen tragedies or natural calamities.
5) Universal Health Schemes
The government needs to fast track such schemes and cover as many states as possible for its benefits to trickle down to the grass roots level. Social security schemes like providing universal insurance coverage etc. have already started generating the buzz especially in the countryside. The government needs to push these harder for every individual to embrace these schemes that will directly help the insurance sector.