The most awaited Union Budget 2015-16 is expected to pick up the mantle for reforms, where the interim budget had left. Since the interim budget of the new government, key economic indicators have shown promise, thereby setting the path for the recovery and growth agenda with the upcoming and practically, the first full-scale Union Budget from the PM Shri Narendra Modi.
Insurance industry has also been a key beneficiary of the reforms initiated in the past eight months. The Indian insurance sector has been traditionally under-penetrated owing to behavioural aspects, lack of awareness and overall lack of affordable funds at the industry’s disposal. With the resurgence in positive sentiments, backed by the initiation of the investment cycle; insurance sector too looks attractively poised to benefit from the vision of the present government. Adding further to the optimism are IRDA’s constant thrusts to ensure a customer-friendly environment by guiding insurance companies across product segments and by introducing new initiatives such as e-policy issuance.
Indian insurance sector continues to evolve even in its 145th year. India’s insurable population is anticipated to touch 75 crore by 2020 with life expectancy reaching 74 years. Stark contrast is visible along the rural urban divide, which further bleaks the bigger picture. World Health Organization’s 2000 World Health Report ranked India’s healthcare system at 112 out of 190 countries. Globalisation has set a chain of investments in motion into the Indian healthcare sector in the past decade. On one hand, India competes with top-quality healthcare facilities at international level; while on the other side the population is afflicted with lifestyle illness such as diabetes and cardio-vascular diseases leading to increase in costs relating to day-to-day care in disease management and long-term increase in healthcare costs. In contrast, the World Bank and National Commission’s report on macroeconomics suggests that only 5% of Indians are covered by health insurance policies.
Rome wasn’t built in a day and therefore the time is now to initiate small progressive steps to help achieving bigger goals. Making Health insurance more lucrative to the people, through this Union Budget, tops our wish list. Health insurance is still looked upon only as a secondary option to other investments by most consumers because of lack of awareness, lower tax exemption or as a stress purchase. Therefore tax benefits on healthcare insurance would help nurture a culture of preventive healthcare in India. However, affordability and awareness still plagues our growth.
Our wish-list from this year’s budget are:
• Under the existing norms, for individuals, In lieu of health insurance, a maximum amount of Rs. 15,000 inclusive of any amount paid for the preventive health care check-ups can be claimed for deduction u/s 80D and senior citizens are entitled for an additional claim of Rs. 5000 under the section. Also, policy holders who have taken additional policies for their parents are allowed to claim a maximum of Rs. 30,000 and Rs. 35,000 in case the parents fall in the senior citizens category. Considering the rising medical costs, these limits should be raised to minimum Rs.1,00,000 for family with additional Rs.10,000 for senior citizens. This move will definitely help in providing the finest healthcare facilities to the public under the insurance umbrella and also promote a sense of well-being among families and individuals.
• The government has ambitious goals for improving healthcare services and the general insurance sector is eager to contribute towards this development. In case of the health insurance, service tax on the total premium amount is 12.36%. Doing away with it completely would help deeper penetration and make insurance policies much more affordable for people.
Lastly, we are hopeful for a swifter conversion of the current FDI ordinance into the Bill. The step will boost the confidence of the foreign investors who are upbeat on India’s growth prospects and for domestic players in the long run.