Expectations from this Union Budget are really high as this is seen as the last full-fledged budget before 2019 elections. Besides the continued stress among farmers and farming community, especially in rural areas, is an area which is expected to receive priority from the finance minister. This is where the insurance-crop insurance scheme can fit in.
Many states have implemented the agriculture insurance schemes for farmers which have met with different degrees of success. We believe that the government will focus more on creating awareness among farmers through training about the benefit of the scheme at Krishi Vikas Kendra and rural NGOs. Provision should be made to improve the infrastructure of all rural banks with internet connectivity which will help farmers to enroll under the scheme. This will help government to achieve target penetration of crop insurance to 50 percent in three years.
There can be special courses offered under the Prime Minister's Skill Development program to develop resources to support this program for loss assessment, conduct crop cutting experiment and educate farmers about good practices.
Apart from this, government should also address the following issues to support farmers income:
1) Farmer credit target to be increased to Rs 11 lakh crore from Rs 10 lakh crore last fiscal
2) Change in minimum support price to entire cost of production plus 50 percent profit
3) Special focus on rural infrastructure
Health insurance is another area where the government really needs to step in a major way. Healthcare cost financing in India continues to face challenges with spiralling healthcare costs, low public health spending, low penetration level of health insurance products with less than one-fifth of Indian population covered under any form of health insurance, thereby resulting in higher out-of-pocket expenses. Besides health insurance policies of private and PSU insurers through individual and group policies, the larger group of insured population is under the three Central government-funded health schemes - -Central Government Health Scheme (CGHS), Employees' State Insurance Scheme (ESIC) and Rashtriya Swasthya Bima Yojana (RSBY).
The National Health Policy 2017 envisages an increase in public health spending to 2.5 percent of GDP by 2025 and advocates a progressively incremental assurance-based approach with focus on universal access to primary healthcare. In this context, the industry expects this budget to have an increased plan allocation for central schemes such as RSBY which can then offer a higher coverage through this scheme as well as improve the quality of coverage. Moves such as increase of sum insured from Rs 30,000 to Rs 100,000 as well as inclusion of critical care and OPD are expected.
To boost penetration of health insurance, industry will welcome a two-fold move -- enhance deduction limit under Sec 80D of I-T Act for spend on health insurance and lower GST rate as the current GST rate of 18 percent is a 3 percent increase over pre-GST era tax rate of 15 percent.
Recent incidents of fire-related tragedies and other accidents also have highlighted the crucial needs of insuring the properties and factories. The Union Budget can share guidelines so that such tragedies can be addressed and survivors of victims receive some support during their times of need.
In a country where insurance penetration and depth are abysmally low, there is an imperative need to educate the population of the importance of covering their lives, properties and health. The regulatory body, IRDAI is doing a commendable job in this regard. The Union Budget can perhaps give it a thrust by supporting annual campaigns on a pan-India basis to popularise both general and life insurance. This would herald a long-term approach to address the issue of low penetration of insurance in India.
(The writer is CEO, JLT Independent Insurance Brokers)
Updated Date: Jan 31, 2018 10:11 AM