State Bank of India (SBI) Urges Government to Prioritize Healthcare and Insurance Sectors in Budget 2025
In preparation for the upcoming Union budget 2025, the finance ministry is facing mounting pressure to make crucial decisions that could significantly impact India’s financial landscape. Speculations are rife about potential announcements aimed at strengthening the healthcare, insurance, and taxation sectors. A recent report by the State Bank of India (SBI) has recommended key measures to revamp these critical areas and promote economic growth.
Priority on Healthcare Budget Allocation and Tax Exemptions
The SBI report has proposed an increase in the budget allocation for healthcare by 5 per cent of GDP, surpassing the 2.5 per cent target outlined in the National Health Policy 2017. This boost in funding is crucial to address India’s growing healthcare needs and ensure the well-being of its citizens. To finance this increase, the report suggests implementing a 35 per cent GST on tobacco and sugary products, along with utilizing proceeds from the healthcare CESS.
Rationalizing GST Rates and Tax Exemptions for Insurance Sector
The report highlights the declining insurance penetration rates in India, emphasizing the urgent need for reforms in the sector. With life insurance penetration dropping to 2.8 per cent and non-life insurance stagnating at 1 per cent, the Insurance Regulatory and Development Authority of India (IRDAI) has a mission to achieve “Insurance for All by 2047.” To encourage more individuals to invest in insurance, the SBI recommends exempting GST and taxes on term and health insurance premiums. It also suggests introducing a separate tax deduction for life and health insurance premiums under both old and new tax regimes, ranging from Rs 25,000 to Rs 50,000.
Integration of Government Pension Schemes and Support for MSMEs
The report advocates for the consolidation of government-backed pension schemes, such as the Atal Pension Yojana (APY) and Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM), to enhance accessibility and effectiveness. Additionally, it proposes special insurance schemes for Micro, Small, and Medium Enterprises (MSMEs) employees and promoters to protect families and businesses against unforeseen losses.
Strategic Reforms for Economic Stability and Social Security
By implementing the recommendations put forth by the SBI report, the Indian government can bolster the insurance and healthcare infrastructure, fostering economic stability and improving the overall well-being of its citizens. These strategic reforms are essential to address the evolving needs of the population and ensure a robust social security framework for the future.
