Deepak Sood, CEO & MD, Future Generali India Life Insurance Co Ltd said “The finance minister through the Union Budget for 2011-12 has addressed three crucial challenges of maintaining growth momentum, control of inflation and fiscal stability. To increase the GDP growth from 8.6 % in the current fiscal to 9% in FY 2011-12, the allocation has been significantly enhanced in infrastructure, health, education, agriculture and rural development amongst others. In order to control high inflation, supply side problems have been addressed through higher credit to agriculture & building of cold storage capacity.
There has been sharper focus on fiscal deficit in the current year which is set to be lowered to 4.6% compared to the earlier estimate of 5.5%. It is likely to further come down to 3.5 % in FY 2013-14. The tighter monetary policy being followed by RBI and now being complemented by tight fiscal discipline will help control inflation in the days ahead.
However, the budget did not clearly mention the overdue hike in FDI limit for the insurance sector which we hope will be addressed at the time of amendment in Insurance Bill. Further there is no hike in tax exemption limit for life insurance, health and pension. We expect that the government will consider the concerns of the insurance sector before finalizing the GST & Direct Tax Code keeping in view the vital role the insurance industry plays in providing long term funds to the trade and industry.
The provision of FII investment in mutual funds and infrastructure bonds is a positive move. Overall the budget is growth oriented and has a progressive outlook.
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