Union Budget 2014-15: What the insurance industry got from this year’s budget

Everyone had great expectations from the Union Budget 2014-15 but did they get what they wanted? We analyse the demands of the medical insurance industry:

By: Nirmalya Dutta | | Updated: July 10, 2014 6:33 pm

Everyone had great expectations from the Union Budget 2014-15 but did they get what they wanted? We analyse the demands of the medical insurance industry: Also Read - 7 reasons why the #BeefBan is good

Antony Jacob, Chief Executive Officer, Apollo Munich Health Insurance said: ‘Today’s Union Budget speech has certainly brought good news for the insurance sector by the government clearly stating its intent to raise the current FDI cap of 26% to 49% via the FIPB route. An enhanced flow of foreign capital and international expertise will result in accelerating overall development of the insurance industry through increased access to international insurance products, distribution channels and world-class business practices. It should have a positive impact in boosting overall growth of the Indian insurance sector and more so for the fast growing health insurance sector. Also Read - Health is a fundamental human right: Healthcare schemes in India you must know about

He added: ‘Additionally, higher FDI limits will also complement the idea of creating 100 new cities as increased infrastructure funding from insurance companies can be used to develop these newer cities. The Budget announced by Finance Minister Arun Jaitley is a populist one, as it has addressed all segments of the population and industries. The proposed setting up of All India Institutes of Medical Sciences (AIIMS) in all the states of the country is a step in the right direction and should complement the promise of building universal healthcare by the Government. To move towards ‘Health for All’, the creation of a free drug service and free diagnostic service for people who cannot afford medical aid is commendable.’ Also Read - PMJAY may not cover cataract operations: Official

Manasije Mishra, CEO, Max Bupa said: ‘This year’s budget is progressive and forward looking and clearly exhibits the new government’s understanding of the impending needs to fuel economic growth through righteous allocation of funds and impetus to foreign investment. The budget brings alive the government’s commitment to provide a stable and investor friendly tax regime. Key thrust on improving the rural economy with focus on development programmes rounds it up as an ideal budget.

He added: ‘From an industry standpoint, I am pleased with the budget as it fulfills the key priorities from our budget wish list primarily FDI hike, overall push to the health insurance segment and greater thrust to the PPP Model. The hike in FDI limit to 49% in insurance will boost industry growth and deepen health insurance penetration in the country. The opening up of the sector will pave way for greater innovation and better quality healthcare. Also, impetus to collaboration with banking correspondents and ample financial sector reform will further insurance penetration in the country. Government’s assurance to take up amendment to the insurance bill will also bring in greater focus on the sector. The decision to invest in credible medical institutes and colleges along with digitization in rural areas will enable utilization of technologies like telemedicine to enhance quality of healthcare and healthcare access in the country.’

Last but not the least, on the direct tax front the changes will surely boost the confidence of the people at large at the time when inflation is a matter of challenge and concern for all.

What they wanted: RSBY or the Rashtriya Swasthya Bima Yojana to be transferred to the health ministry from the labour ministry

The RSBY is a very ambitious plan to provide 120 million people with health insurance and it was believed that the ministry which handled the RSBY programme would be changed as the health ministry was better equipped to deal with the issue. ‘We need a central coordinated effort on universal health coverage. If RSBY has to be scaled up to cover everyone, we would need the vision of the health ministry or at least ensure that labour and health come together on a platform to expand the existing programme,’ said A Vaidheesh, vice-president, Johnson & Johnson, and chairman, CII healthcare sub-committee on health insurance had told ET.

What happened: No mention of the RSBY in the budget

What they wanted: More FDI in insurance and higher tax exemption for investment

The current limit on FDI in insurance was 26%. The desire was to increase FDI in insurance.

What happened: FDI was increased to 49% in insurance, along with insurance in budget.

What they wanted: PPP in healthcare

Manasije Mishra, CEO, Max Bupa, told ET that the only way universal health coverage could be achieved is through public-private partnership (PPP) model.

‘We need to go beyond the RSBY module and reach out to a wider population to provide quality healthcare at a faster pace. Allocation of resources for PPP (public private partnership) to increase health insurance penetration and improve the overall healthcare scenario will be a positive move for the sector. We need a unified and universal system that is funded through a progressive taxation system,’ he said.

What happened: New institution set up to provide support to mainstream PPP procedures though we don’t know whether they’ll participate in the healthcare sector.

Also read:

For more articles on the Union Budget 2014-15, check out our Union Budget 2014-15 section. Follow us on Facebook and Twitter for all the latest updates! For daily free health tips, sign up for our newsletter. And to join discussions on health topics of your choice, visit our forum.

Published : July 10, 2014 5:06 pm | Updated:July 10, 2014 6:33 pm

Read Disclaimer