Union Finance Minister Nirmala Sitharaman chairs the ninth Pre-Budget Consultation with the experts from the Infrastructure, Energy and Urban Sectors in connection with the forthcoming Union Budget 2025-26, in New Delhi
| Photo Credit: ANI

Insurers are seeking tax benefits for buyers and incentives for selling policies in their wishlist for the upcoming Union Budget as the country is projected to emerge as the G20’s fastest-growing insurance market.

In 2023-24, the country’s insurance penetration was at 3.7% compared to 4% in 2022-23, according to the Insurance Regulatory and Development Authority of India (Irdai).

The insurance penetration for the life insurance industry marginally declined to 2.8% during 2023-24 from 3% in the preceding year. The penetration with respect to the non-life insurance industry remained the same at 1% during 2023-24 as in 2022-23.

India is expected to lead G20 with an average 7.3% premium growth over 2025-29 and become the fastest-growing insurance market among the elite grouping, a Swiss Re report released on Tuesday (January 14, 2025) said.

On expectations from the Budget, Neha Parikh, Vice President and Sector Head – Financial Sector Ratings at ICRA Ltd, said that given the weak solvency position of the PSU general insurance companies, the announcement related to budgetary allocation for their recapitalisation will be positive.

“Further, given the low penetration of the insurance segment, the government can announce measures to incentivise the penetration, especially for the lower ticket size policies,” Ms. Parikh said.

Mayank Gupta, Co-founder and COO at Zopper, was of the opinion that addressing the ailing insurance penetration problem by incentivising the industry participants to bring new-to-insurance customers into their fold could be one such strategy to expedite the coverage of larger populations under insurance.

“Allowing insurance companies greater flexibility in creating and distributing insurance plans by using technology and moving beyond traditional methods is also the need of the hour,” he said.

Mr. Gupta suggested that cross-selling insurance along with other financial products should be encouraged as this reduces the distribution cost of insurers while at the same time easing the accessibility and affordability of such products for the end customer.

Balachander Sekhar, co-founder & CEO of RenewBuy, said the Union Budget provides excellent opportunities to pump up the insurance sector, which is hoping for a reduction in GST rates to make health insurance more affordable, an increase of tax exemption to encourage people to buy insurance policies that would ultimately provide security and long term capital, and rationalisation of capital gain taxation.

“In addition, providing incentives for insurance in rural India will significantly impact expanding and promoting insurance in those areas where penetration is very low,” Mr. Sekhar added.

On Budget expectations, Anup Rau, Managing Director and Chief Executive Officer of Future Generali India Insurance Company, said India’s insurance sector is poised for its most significant reforms to date.

The IRDAI has set an ambitious vision of “Insurance for All by 2047”, prompting stakeholders to explore innovative yet prudent ways to expand affordable coverage.

“Affordability will drive accessibility thereby enhancing reach and penetration of insurance across the country,” he said.

On the health insurance side, Rau said there is a need to enhance the deduction limit under Section 80D, which has remained unchanged for nearly a decade now despite a significant surge in healthcare costs.

Avinash G Singh, Head – Investment Research & Analytics at Aranca, said the insurance industry is looking forward to the Union Budget 2025 with hopes for reforms that could drive growth and accessibility.

Key expectations include a dedicated tax deduction for life insurance premiums under Section 80C, a revision of income tax slabs and exemption limits to enhance disposable incomes, and measures to encourage higher investments in insurance products, Mr. Singh said.

Meanwhile, Swiss Re in a report on the insurance market outlook for India said India’s insurance market is projected to be the G20’s fastest-growing market over the next five years, with total premium volumes (life and non-life) up 7.3% in real terms on average each year.

Growth underpinned by macroeconomic tailwinds, digitalisation progress and the conducive regulatory environment, it said.

The report said life premiums are estimated to grow by 4.8 per cent in 2024 in real terms and by 5 per cent in 2025 (2025-29: 6.9 per cent), following a meagre 0.7 per cent growth in 2023, when the savings segment was adversely impacted by regulatory and taxation changes.

“The non-life insurance business is forecast to expand to 7.3 per cent (up from 5.7 per cent in 2024) on the back of rising risk awareness, robust economic growth and regulatory initiatives in support of digitalisation,” it added.

There were 26 life insurers, 25 general insurers, eight standalone health insurers, 12 reinsurers and foreign reinsurance branches, and two specialised insurers, registered as of March 31, 2024.

Union Finance Minister Nirmala Sitharaman chairs the ninth Pre-Budget Consultation with the experts from the Infrastructure, Energy and Urban Sectors in connection with the forthcoming Union Budget 2025-26, in New Delhi.
| Photo Credit: ANI

Ahead of the upcoming Budget, industry bodyConfederation of Indian Industry (CII) on Sunday (January 12, 2025) suggested a 10-point agenda to drive ease of doing business reforms, aimed at reducing compliance burden, simplifying regulatory frameworks, and improving transparency.

Among the “urgent policy interventions”, the industry body has recommended that all regulatory approvals – central, state and local levels – must mandatorily be provided only through the National Single Window System.

It has also pitched for expediting the process of dispute resolution by improving the capacity of courts and placing greater reliance on alternative dispute resolution (ADR) mechanism.

For streamlining environmental compliances, CII said, a unified framework could be introduced, which consolidates all requirements into a single document.

Emphasising that easy access to land is important to facilitate new or expanding businesses, it said that states may be incentivised to develop an online integrated land authority with an objective to streamline land banks, digitise and integrate land records, provide information on disputed land and guide necessary reforms.

To assist industry in land acquisition across nation, the India Industrial Land Bank (IILB), which provides information on land across majority of states, can be evolved into a national-level land bank, with dedicated central budget support, it said.

While India has over the last decade remained focused on improving ease of doing business (EoDB), there is a need to maintain the momentum, especially in certain specific areas, the CII stated.

CII Director General Chandrajit Banerjee said, “Simplifying regulatory frameworks, reducing compliance burdens, and enhancing transparency should continue to remain our focus agenda for next several years. Compliances for industry related to various areas such as land, labour, dispute resolution, paying taxes and environment offer a vast scope for reduction, vital for boosting competitiveness, driving economic growth and employment generation.” To ensure timely processing of industry applications and delivery of services from the central ministries, an Act, imposing statutory obligation on all public authorities for time-bound delivery of services and redressal of grievances, could be passed, with provision of deemed approval beyond the prescribed timeline, CII suggested.

It stressed that the scope of the National Judicial Data Grid (NJDG), which has been set up to identify, manage and reduce pendency of cases across the courts, needs to be expanded to include the data of tribunals, which constitute substantial chunk of pendency of cases in the system.

Arguing that labour compliances continue to be extensive and arduous and await the implementation of the four labour codes, it called for the scope of the Shram Suvidha Portal, which facilitates integrated compliances in just a few select central Acts, to be expanded to function as a centralised portal for all central and state labour laws compliances.

Asserting that improving trade facilitation is important, it said there is a need to make the Authorized Economic Operator (AEO) programme, which allows numerous priority clearances to members, could be made more attractive and easier to join, it noted as part of the 10-point agenda.

Flagging the “high and rising pendency of tax disputes” as a major issue, CII said there is a need to minimise income tax litigation by unclogging the pendency at the level of Commissioner of Income Tax (Appeals) and improving the effectiveness of ADR mechanism such as Advance Pricing Agreement, Boards for Advance Rulings and Dispute Resolution Scheme, as part of the EoDB reforms.

 According to a statement issued by EPS-95 National Agitation Committee, the Finance Minister has conveyed to the delegation that their demands would be reviewed and addressed in a sympathetic manner. File
| Photo Credit: PTI

A delegation of EPS-95 pensioners met Finance Minister Nirmala Sitharaman on Friday (January 10, 2025) to press for their long-pending demand for a minimum monthly pension of ₹7,500 along with dearness allowance (DA).

Under the EPS-95 or Employees Pension Scheme 1995 run by retirement fund body Employees’ Provident Fund Organisation (EPFO), the existing minimum monthly pension is ₹1,000.

Comment: An opportunity to rethink India’s pension system

According to a statement issued by EPS-95 National Agitation Committee, the Finance Minister has conveyed to the delegation that their demands would be reviewed and addressed in a sympathetic manner.

Commander Ashok Raut, National President of the committee, highlighted the plight of over 78 lakh pensioners from Central and State government PSUs, private organizations, and factories across the country.

Pensioners have been agitating for over 7-8 years for an increase in the minimum pension from ₹1,000 to ₹7,500, along with DA and free medical treatment for both the pensioner and their spouse.

“Finance Minister Nirmala Sitharaman has said that the demands of pensioners will be considered with great empathy. This assurance gives us hope, but the government must act decisively by announcing ₹7,500 as the minimum pension with DA in the upcoming budget. Anything less will fail to provide the dignity that senior citizens deserve,” Commander Raut stated.

He criticised certain labour organizations for demanding a lower minimum pension of ₹5,000, calling it inadequate and unfair to the pensioners’ basic needs.

He emphasised that ₹7,500 is the minimum amount required for a dignified life.

Despite the government’s 2014 announcement of ₹1,000 as the minimum monthly pension, over 36.60 lakh pensioners still receive less than this amount, the body claimed.