The insurance sector, while reacting to the Budget announcements made last week by finance minister Pranab Mukherjee, iterated its demand of increasing the FDI limit and asked for a major initiative to promote long-term savings through a separate format.
The industry players, however, welcomed some of the FM?s moves, including income tax relief, setting up of apex-level financial stability council, legislative reform paneland pan-India annual check ups.
Future Generali India Life Insurance Co CEO & MD Deepak Sood said, ?The FM has addressed the two most crucial issues of economic growth & fiscal consolidation. With the relief in income tax to individuals, the middle class will have more disposable income. We believe this will result in higher savings and boost the insurance industry.?
However, the FM failed to address the long-pending demand of hiking the FDI limit for the insurance sector. The proposal to set up apex-level financial stability council and legislative reform panel is a step in the right direction, he added.
?Overall, the Budget has sent out positive signals with the 9% growth forecast and 5.5% fiscal deficit target. The FM has laid the emphasis on infrastructure, water, power and renewable energy sectors as well as non-polluting technologies. However, it is disappointing to see that this year too there is nothing significant in the Budget for the insurance industry,? said Amarnath Ananthanarayanan, CEO, Bharti AXA General Insurance.
According to Rajesh Sud, CEO & MD with Max New York Life Insurance, ?The Budget is a balanced one with no major surprises. The proposal to limit the service tax to fund management charges only in Ulips has removed the anomaly of not having a level playing field for various financial products. This step will improve the returns for life insurance policyholders.?
Rajesh Relan, MD of MetLife India Insurance Co, said, ?The middle class will have huge investable surplus in their hand because of new lower income tax levels. This money can get channelised into a whole lot of investment options.?
The industry was expecting an increase in the current saving limit of Rs 1,00,000 under 80C. The announcement of a dedicated additional deduction limit of Rs 20,000 in long term infrastructure bonds was a step in that direction, though it does not translate into any direct benefit or advantage for the sector. The industry was also expecting a tax incentive in the form of creating a separate category for life insurance. From that perspective the Budget was a disappointment, he opined.