India stands at a critical juncture today given the slowing growth, burgeoning fiscal deficit and high inflation. The finance minister has achieved a commendable feat by drafting a Budget that provides the necessary catalyst for achieving sustainable and inclusive growth. At the same time, containing the fiscal deficit to 5.2 per cent in FY13 and an estimated 4.8 per cent next financial year will go a long way towards allaying fears of deteriorating fiscal health.
In a clear message aimed at fiscal prudence, he has proposed to reduce the subsidy burden to Rs 2.21 lakh crore in FY14 compared to Rs 2.48 lakh crore for the current financial year. He has also been forthright in emphasising that given the high current account deficit of $75 billion, foreign investments are absolutely necessary and no longer a matter of choice.
The Budget clearly puts emphasis on long-term development by increasing outlays in critical areas of infrastructure projects, rural development and preventive healthcare. In addition, focusing on education including medical research will help in increasing supply of skilled manpower in the years to come. At the same time, it has shown a clear intent to direct household savings towards financial assets, thereby reducing the current skew towards asset classes like gold and land. It will be interesting to track the actual success achieved in this redirection effort in the near future.
On the insurance front, the Finance Minister has given due cognizance to the need for increasing insurance penetration. Significant among these are steps to allow banks to function as insurance brokers, automatic approval for insurers to open branches in tier II towns, facilitating promotion of micro insurance products through banking correspondents and enabling self help groups and Anganwadi workers to access group insurance schemes. Another welcome measure has been the extension of Rashtriya Swasthya Bima Yojana (RSBY), a mass health insurance program for BPL families, to other categories like rickshaw pullers, taxi drivers, mine workers etc. This scheme already covers 3.4 crore BPL families and has received international recognition for its innovative approach and use of technology.
In summary, this budget is a responsible and balanced exercise aimed at achieving inclusive growth while ensuring discipline on the fiscal deficit front.
Bhargav Dasgupta
MD and CEO, ICICI Lombard General Insurance Co Ltd
MD and CEO, ICICI Lombard General Insurance Co Ltd
