Union Budget 2022-23: Pandemic has taught us the importance of buying insurance and the need for fiscal prudence and security
Indian Union Budget 2022: Pandemic has very well taught us the importance of buying insurance
Last year, the finance minister delivered an unprecedented Budget against the backdrop of an unprecedented event – the global pandemic. The entire focus was on inducing growth, reviving various sectors of the economy to make the country an Atmanirbhar Bharat; and at the same time, create a balance to attract private and foreign investments.
Measures such as increase in health care spends, new scheme for health care with outlay of Rs 64,000 crore over the next six years and Rs 35,000 crore set aside for vaccination programs, investments in primary, secondary and tertiary health care and wellness centre will all go a long way in delivering better health care services to both urban and rural India.
Landmark announcements such as disinvestments in many PSUs, 2 PSU Banks and 1 General Insurance company, setting up an ARC for managing the stress assets in the economy, vehicle scrapping policies, tax reforms, FDI In Insurance going upto 74 percent, FINTECH hub in Gift City, LIC IPO to be completed etc. clearly showed government’s intent to make India self-reliant and globally competitive.
The fact that no new taxes, surcharges etc were levied meant that there was nothing in the budget to hurt the sentiments of investors and taxpayers. The markets seem to have recognized this and responded positively.
With a clear focus and strong governance, India showed the way to the world and achieved record vaccination levels within record timelines. All previous policy stances, coupled with a strong resolve to combat and contain the effects of the pandemic, saw India clock a GDP of 8.4 percent in Q2 along with few other high-frequency economic indicators inching towards pre-pandemic levels, giving signs of an economy well on its revival path. However, with the eruption of the on-going third wave unveiling new set of challenges for policymakers, we could see an altering of equations in the upcoming budget.
While the economic damage due to the third wave is likely to be shorter and contained within the first quarter and with a relatively good April – November period, challenges will be felt in contact intensive sectors.
Focussing on infrastructure spends, revival of the MSME and SME sectors, aiding rural growth could be some of the important areas for the government to work upon to aid recovery. Needless to say the continued and accelerated investment in healthcare sector, something which can help the country better insulate against any such healthcare scares in the future. The pandemic has, more than ever before, shown the need for quality healthcare at affordable prices. Another possible area to spurt demand is to look at GST rates of some of the consumer goods and services.
From the insurance point of view, my wish list is to see the GST rates for insurance going down and a further increase in the investment limits for insurance. The pandemic has very well taught us the importance of buying insurance and the need for fiscal prudence and security. Both these measures will go a long way in spurring the demand for insurance and making it favourable for buying insurance in a country where insurance penetration is abysmally low.
The finance minister did a remarkable balancing job last year to make sure India remained steadfast and resilient in the face of the global pandemic. However, this is going to be yet another challenging year maintaining a tight ropewalk, balancing monetary policies, investments, inflation and lasting economic recovery.
The author is MD and CEO – Kotak Mahindra General Insurance Co. Ltd. Views are personal.
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