India: FY2017-18 Budget hailed for pro-insurance measures
Source: Asia Insurance Review | Mar 2017
The government’s FY2017-18 Budget has been hailed for boosting the potential for increased insurance coverage in the country. Among the fiscal measures announced in his Budget speech on 1 February, Finance Minister Arun Jaitley increased the coverage under the crop insurance scheme Pradhan Mantri Fasal Bima Yojana (PMSBY) from 30% of crop areas currently to 40% in 2017-18 and 50% in 2018-19.
The government will also increase its spending on PMFBY to INR13,240 crore (US$1.97 billion) from INR5,500 crore at present, which the insurance industry said will help bring more farmers under the insurance plan. More than one million farmers at present are covered by the plan which was approved in January 2016 with heavy premium subsidies by the government.
“The increase in insurance cover under PMFBY will result in an increase in premium by 15-20% by the industry in the next fiscal year,” National Insurance Chairman and MD, Mr Sanath Kumar, said.
Referring to income tax changes, Mr M Ravichandran, President – Insurance, Tata AIG General Insurance, noted that under the Budget, the disposable income for individuals earning between INR2.5–5 lakh (US$3,700-7,400) will increase due to the halving of the tax rate to 5% from 10%. “This will encourage the lower and middle income strata of people to invest in instruments such as insurance, mutual funds, fixed deposits etc,” he said.
The Budget also promotes the “Digital India” initiative. As people in rural areas become more tech savvy, they will use insurers’ digital channels to buy policies.
Mr K G Krishnamoorthy Rao, MD & CEO of Future Generali India Insurance, said the government’s aim to build 10 million houses by 2019 will be an impetus to the home insurance segment.