BS Reporter, 16 March, 2012
The overall budget seems to be a balanced one. In view of the economic conditions of the country, it is important to encourage moves for a sustainable growth. Budget 2012 has been a bag of mixed propositions.
While the taxpayers can cheer for the suggested changes in the income tax structure which will help in more disposable income, however, given the higher inflationary trends, much more relief could have been brought in.
From a GI industry perspective, we are happy to see Finance Minister referring to introduce the long awaited Insurance Law (Amendment) Bill 2008 in this session. The industry holds a lot of expectations as the bill, once passed, will certainly stimulate reshaping the growth in the sector and economy on the whole.
It is also encouraging that tax would now be exempted on preventive health checkups up to Rs 5,000. We hope that this will encourage people to take cognizance of their health and well-being and consequently adoption of much-needed health insurance across the Country.
Emphasis on developing the infrastructure and allocation of more funds will improve the quality of life for the people. Planned investments in infrastructure while providing the required fillip to the economy will also help in greater penetration and business growth for the general insurance industry.
In order to maintain healthy fiscal growth, the service tax is hardened to 12% from 10% earlier. While the proposal from service tax is expected to yield additional revenue of an order of ~ Rs. 19,000 crore, the pinch of the hike will be felt by every individual as cost of all the services availed, including General Insurance will be costlier.
A hike in excise duty by 2% has already seen automobile companies to increase their prices. This could negatively affect customers’ sentiments towards vehicle buying.
--Ajay Bimbhet, Managing Director, Royal Sundaram Alliance Insurance Co Ltd