The interim Budget for the fiscal year 2024 has brought forth significant announcements that bear substantial implications for the Indian insurance sector. With a focus on bolstering financial resilience, promoting innovation, and enhancing financial inclusion, these announcements signal a transformative phase for the insurance industry in the country:
Crop Insurance to 4 Crore farmers:
In her budget speech, Finance Minister Nirmala Sitharaman said crop insurance has been given to 40 million farmers under the Pradhan Mantri Fasal Bima Yojana (PMFBY). PMFBY intends to provide insurance coverage and financial assistance to farmers if any of the notified crops fail due to natural disasters, pests, or diseases. In addition to unseasonal and cyclonic rainfall, hailstorms have been added to post-harvest losses. cloudbursts and natural fires have also been added to the list of localized calamities, in addition to landslides and inundation. This should ensure penetration and awareness of insurance in rural India, giving a boost to the insurance sector.
“Insurance For All' Reinforced with Health Cover Extension
FM Sitharaman announced extension of health cover under “Ayushman Bharat Pradhan Mantri Jan Arogya Yojana '' scheme to all ASHA (Accredited Social Health Activists), Angawadi workers and helpers. This scheme was introduced previously to provide a health cover of Rs 5 lakh per family per year for secondary and tertiary care hospitalisation. It offers cashless access to healthcare services and provides up to 3 days of pre-hospitalization and 15 days of post-hospitalization costs, including tests and medications. According to the interim budget, the scheme would now encompass all ASHA, Angawadi workers, and helpers, in addition to those who are already covered. This extension is significant, particularly for increasing insurance penetration among women and propelling India towards the noble goal of 'Insurance for All' by 2047. Furthermore, the allocation to the PMJAY scheme for FY25 is now Rs 7,500 crore, up from Rs 6,881 crore in revised FY24 projections.
Focus on Digital Transformation
The budget has emphasized the need for accelerated digital transformation in all business sectors including the insurance sector. The FM said that digital public infrastructure (DPI) has been instrumental in formalisation of the economy. Reportedly, the FM also stressed on how infrastructures, such as physical, digital or social, are being built in record time, A considerable allocation has been earmarked for the development of digital infrastructure, including the integration of advanced technologies like artificial intelligence. This push towards digitization will help streamline processes, reduce operational costs, and enhance the overall efficiency of insurance operations.
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Incentives for Startups
Recognizing the role of technology in shaping the future of insurance, the government has announced certain incentives for startups and these are bound to help the Insurtech startups . The FM stated that the government will create a Rs 1 lakh crore corpus with a 50-year interest-free loan to support the growth of India's tech startups. The corpus will allow for long-term borrowing or refinancing with low or zero interest rates. This will inspire the private sector to expand its research and innovation initiatives. This move will also encourage innovation within the insurance sector, attract investments, and promote the development of cutting-edge solutions that can enhance the customer experience and offer novel risk management strategies.
Conclusion:
The key announcements in the interim Budget 2024 for the Indian insurance sector underscore a commitment to fostering innovation, expanding coverage, and strengthening the sector's foundations. As the industry embraces digital transformation, navigates emerging risks, and reaches previously underserved markets, the future appears promising for insurers, policyholders, and the economy at large. With these initiatives, the Indian insurance sector is poised to play a pivotal role in safeguarding the nation's economic well-being and promoting financial security for all.
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