India is a young country. The majority of the population belongs to the working age group between the ages of 18 and 60. According to the economic survey, his net national income per capita has risen from Rs. 265 ~ Rs. 1,50,326 in fiscal year 2022. India’s savings rate has also soared from an all-time low of 7.9% in 1954 to 28.2% in 2021.
The insurance sector of India has been constantly recording double-digit growth since the past few years and has the potential to maintain this growth for the next decade. The growth is due to the fact that there’s modernization in the insurance sector in the insurance sector.
Combined with a stable macroeconomic environment, aggressive policy reform, and growing per capita income and savings, this famine could propel the industry into the world’s leading insurance market. Budget 2023 could be a catalyst for reform as the insurance sector prepares for faster growth.
As the Indian youth is maturing and their point of view towards personal finance improves, the Indian government is optimistic and completely focused on mobilizing savings into production channels, creating sustainable job opportunities and supporting long-term capital formation through the insurance industry.
The Republic of india’s desire to become a global superpower could be assisted by the growth of the insurance sector of India and it could prove colossal in removing china as the most lucrative investment destination; China’s depreciating population, trembling economic sector and growing separation at the international stage could awesomely help india in establishing itself as a global superpower
Guaranteed availability of insurance through tax incentives :
Investing in life insurance is a long-term investment unlike other investment options covered by 80C which have a much shorter investment horizon. All are now grouped under the same IT deduction section (80C) with a cap of INR 1,50,000. It is likely that the Budget will consider creating a separate section for tax deductions on life insurance premiums. This allows an investor’s money to be more logically divided into long-term and short-term kittens. The insurance purchaser may also be rewarded with a lower GST rate for him. The existing 18% interest rate undermines affordability, while the 5% fixed rate helps drive the need for insurance. Lower tax rates and lower premiums for buying insurance of any kind will only equate insurance to savings.
Booming Pension Opportunities
Our young demographic and resulting demographic dividend generate a lot of excitement, but at the same time, we are home to the second largest elderly population in the world with 138 million people over the age of 60. must also be recognized. That number is expected to rise to 194 million by 2031, according to a National Bureau of Statistics study. Moreover, life expectancy in India has increased by 3.5 years for every 10 years he has in the last 30 years.
This significant aging of the population underscores the growth of the Indian bond and pension markets. Annuities solve the main dilemma of retirees – life annuities with stable and guaranteed interest rates, exposing investors to interest rate reinvestment risk. This is especially true in scenarios where interest rates fluctuate. Annuities are the only solution that fully protects you for a longer life (i.e. surviving your own body) by providing a regular stream of income throughout your life rather than buying it as a lump sum.
Tax breaks on pensions could therefore be a game changer. Annuities are now fully taxed in the hands of customers, making the product less attractive. Also, the Rs. 50,000 tax incentive provided to NPS under Section 80CCD (1b) exceeds Rs. The 80c’s 150,000 luff limit should be extended to annuities. Additionally, governments should allow companies to issue long-term bonds to institutional investors (mainly pension providers) to manage interest rate risk for longer-term projects. In addition, it helps insurers direct their long-term savings to capital-intensive sectors.
