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What prospects does the India budget 2023-24 entail for

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National Finalist

National Finalist

banking & insurance industry?

National Finalist

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Rohit Bhunya

B.Tech in Electronics & Computer Science, 2nd year

KIIT University

Introduction

India'sbudgetforthefinancialyear 2023-24 was presented by the Finance Minister of India, Smt. NirmalaSitharaman,on1stFebruary 2023. The budget outlined several policies and initiatives aimed at boosting the growth and development of the Indian economy,withaparticularfocuson the banking and insurance industries. In this article, we will examine the prospects that the India budget 2023-24 entails for thesetwoindustries.

BankingIndustry:

The banking sector is a critical componentoftheIndianeconomy, andthebudget2023-24hasseveral provisions aimed at strengthening and improving the sector. The key aspects announced in the India budget2023-24include:

Infusion of Capital: The government has announced aninfusionofRs.70,000crore intopublicsectorbanks.This capitalinfusionisexpectedto strengthenthebanks'balance sheets, improve their lending capacity, and boost credit growth.

DigitalPayments: Thebudget has proposed several measurestoencouragedigital payments, including the introduction of a new digital paymentplatform,areduction in transaction fees for digital payments, and the establishment of a regulatory sandbox to promote innovation in the digital paymentspace.

Expansion of

Credit

Guarantee Scheme: The budget has proposed an expansion of the Credit Guarantee Scheme for Micro andSmallEnterprises

(CGS-MSEs). This scheme will now coverloansofuptoRs.2crore,an increasefromthepreviouslimitof Rs. 1 crore. The expansion of the scheme is expected to provide greater access to credit for small businesses and promote entrepreneurship among youth in India.

4. Infrastructure Financing: The budget has proposed the establishment of a new Development Finance Institution (DFI) to finance infrastructure projects in the country. The DFI is expected to mobilize resources from both domestic and international sources and provide long-term financing for infrastructureprojects.

These measures are expected to have a positive impact on the banking industry in India. The infusionofcapitalintopublicsector bankswillstrengthentheirbalance sheets and enable them to lend more.Thefocusondigitalpayments will encourage the adoption of digitalpaymentmethods,whichare more efficient and secure than traditional payment methods. The expansion of the credit guarantee schemewillprovidegreateraccess tocreditforsmallbusinesses,while the establishment of the DFI will provide long-term financing for infrastructureprojects.

The insurance industry is another critical component of the Indian economy, and the budget 2023-24 has several provisions aimed at promoting its growth and development. The key aspects announced in the India budget 2023-24include:

Increase in FDI Limit: The budget has proposed an increase in the foreign direct investment (FDI) limit in the insurance sector from 49% to 74%. This move is expected to attractmoreforeigninvestment into the sector, boost competition, and improve the availabilityofinsuranceproducts inthemarket.

Health Insurance: The budget hasproposedtheintroductionof anewhealthinsurancescheme called the National Health ProtectionScheme.Thescheme will provide coverage for hospitalization expenses up to Rs. 5 lakh per family per year. This scheme is expected to providegreateraccesstohealth insuranceformillionsofpeople inthecountryandimprovethe overallhealthoutcomes.

InsuranceIndustry:

Pension Fund: The budget has proposedtheestablishmentofa newPensionFundDevelopment Authority to regulate the pension sector in the country. This authority will oversee the functioning of pension funds and ensure that they are managedinatransparentand

4. DigitalInfrastructure: Thebudget has proposed the creation of a digital infrastructure for the insurance sector, including the establishment of a centralized databaseofinsurancepoliciesand theuseoftechnologytostreamline claimsprocessing.

These measures are expected to have a positive impact on the insurance industry in India. The increaseintheFDIlimitisexpected toattractmoreforeigninvestment into the sector and improve competition, while the National Health Protection Scheme will provide greater access to health insuranceformillionsofpeopleand improve overall health outcomes. TheestablishmentofanewPension Fund Development Authority will ensure that pension funds are managed transparently and efficiently,whichwillboostinvestor confidenceinthesector.Finally,the creation of a digital infrastructure fortheinsurancesectorwillimprove efficiencyandstreamlineprocesses.

Conclusion:

In conclusion, the India budget 2023-24 has several provisions aimedatboostingthegrowthand development of the banking and insurance industries. The measures announcedinthebudgetare expectedtohaveapositiveimpact on these industries, improving access to credit, boosting competition, attracting more foreign investment, and improving overall efficiency. However, the success of these measures will depend on their effective implementation and the government'sabilitytoaddressany challenges that may arise. If implemented successfully, the measuresannouncedinthebudget couldpavethewayforastronger, more resilient banking and insuranceindustryinIndia.

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