Working on mechanism to cover more of rural India under insurance space- ED, IRDA
Anticipating robust demand for credit in wake of the bumper monsoon, the government has advised the finance institutions to provide more and more credit to farmers and the government is also prepared to increase the budget by a few lakh crore rupees in this regard, minister of state for finance, Mr J.D. Seelam said at an ASSOCHAM event.We have requested the finance institutions to take advantage of good monsoon so that more and more farmers could be given credit and if need be, by increasing the budget amount of some lakh crores, we are prepared to do that, said Mr Seelam while inaugurating a national summit on 'Investing in Multiple Financial Products' organized by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
We need to moderate the inflation because consumer goods like milk, eggs, fruits and vegetables are still showing up high inflation rates but thanks to the good monsoon the food inflation should be contained after improving the supply chain, said Mr Seelam.
He also said that overall, the economy is looking much better than it was last year and also hoped that India's current account deficit will remain at about 60 billion dollars which will be easily funded and fiscal deficit will also remain well below the red line drawn by the finance minister.
Sharing his concerns that about 40 per cent people from rural areas and those belonging to most vulnerable and weaker sections lack access to institutional finance, the minister said, There is a need to increase the investor base through special designs, instruments and specific and class-wise products so that even the middle class and lower-level salaried employees are also brought into the investor net.
The minister also stressed upon the need to make India investment friendly and the need for sophisticated and attractive financial products delivered through safe and transparent institutions. We must have a proper, transparent, regulatory and investor grievance redressal mechanism so that people looking for reliable products and instruments to maximize their investments find it a creditworthy system.
We are focusing on rural and geographically uncovered areas of the country to various regulatory and development measures for prescribed settings and parameters by which insurance companies have to have a certain portion of their business in the rural areas to plug the gap in insurance business and cover more and more of rural India under the insurance space, said Mr Sriram Taranikanti, executive director of Insurance Regulatory and Development Authority (IRDA) while addressing the ASSOCHAM summit.
There is a tremendous scope for increase in insurance penetration in the country from the existing level of about four per cent as even one per cent increase in insurance penetration can mobilize savings every year to the extent of about Rs one lakh crore in the country, said Mr Taranikanti. In rural India we have insurance penetration to the extent of about 0.65 per cent which is less than even 10 per cent insurance business in the country while in urban areas we have 6.65 per cent insurance penetration, so there is a lot of scope for insurance penetration in both rural and urban areas.
IRDA is also working very strongly on improving the distribution network through a series of measures - engaging with common service centres, bank branches, debt aggregation space and others, he added.
IRDA feels two areas where there is tremendous scope to increase the reach of insurance sector are disaster management and crop insurance, further informed Mr Taranikanti. On the disaster management front, we are working closely with the National Disaster Management Authority (NDMA) and the union ministry for Home Affairs while on the crop insurance side we are working with agriculture ministry and National Institute of Rural Development (NIRD) on how the crop insurance could actually be increased and to enhance the agriculture productivity in the long run and give a tremendous boost to entire rural segment.
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