A landmark budget for the insurance sector

Thursday’s budget presentation by finance minister Arun Jaitley, was widely in line with the expectations laid out earlier to tackle rural distress head on. On that count, this budget is indeed the much-needed fillip to the flagging rural economy, targeting doubling of farmer income by 2022.

From a sector perspective, this is a landmark budget. The announcement to launch the National Health Protection Scheme, the world’s largest government-funded health care programme, is a bold and ambitious move. Under this scheme, over 10 crore poor and vulnerable families (approximately 50 crore beneficiaries) will be provided coverage of up to Rs 5,00,000 per family per year for secondary and tertiary treatment.

Secondly, extension of Pradhan Mantri Jeevan Jyoti Beema Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY) to cover all poor households will bring the security of insurance benefits to marginalised sections, giving basic economic protection in cases of the death or injury through accidents of a family member. Thirdly, the budget has also proposed expanding the coverage under Pradhan Mantri Jan Dhan Yojana (PMJDY) by bringing all sixty crore basic accounts within its fold and provide services of micro insurance and unorganised sector pension schemes through these accounts, which will further bolster economic security for lower income groups. Insurance penetration in India remains abysmally low, at 2.72 per cent for life insurance and 0.77 per cent for non-life insurance for 2016, according to regulator Insurance Regulatory and Development Authority of India,  and these measures will help move the needle on penetration.

Merger of three public sector general insurance companies and listing them is welcome. Full details are awaited.

Finally, the decision to increase 80D exemption limit for health insurance and/or medical expenditure from Rs 30,000 to Rs 50,000 will not just benefit senior citizens, but will also help in the crusade to increasing health insurance penetration.

(The writer is CMD of New India Assurance)