In the Budget speech today, Finance Minister Nirmala Sitharaman announced an increase in the Foreign Direct Investment (FDI) limit for the insurance sector, raising it from 74% to 100%, albeit with certain restrictions.
"The FDI limit for the insurance sector will now be 100 percent, but only for companies that invest the entire premium within India. In addition, we will review and simplify the existing conditions and safeguards related to foreign investment," she said.
All these reforms had been proposed by the central government earlier. These included an increase in FDI for the insurance sector, besides enabling insurers to operate in different categories of insurance business. To this effect, the government had invited people to give their comments upon the amendment of certain crucial enactments, like the Insurance Act 1938, the Life Insurance Corporation Act 1956, and the Insurance Regulatory and Development Authority Act 1999.
The IRDAI has set a target of achieving "Insurance for All" by 2047.A large proportion of India's population and insurable assets remain uninsured, which leads to high out-of-pocket expenses and puts pressure on public finances. The increased FDI limit is expected to attract more investment into the sector and help bridge this gap.
The Budget session of Parliament, that commenced on January 31, is to wrap up on April 4. Today, the Finance Minister laid out the government's fiscal policy, taxation reform, and main financial proposals of the next fiscal year. She has presented this budget for the eighth consecutive year.
The Economic Survey 2024-25, tabled in Parliament yesterday, estimates the country's economy to expand in the range of 6.3% to 6.8% during the next financial year (2025-26). The survey, however, also mandated that for India to achieve its "Viksit Bharat" vision for the next couple of decades, sustained economic growth around 8% is needed. Again, this comes at a time when the overall growth in the financial year has seen dwindling growth in the first two quarters.