India's Union Budget 2024, to be presented on February 1st, will be an interim budget due to upcoming elections. Finance Minister Nirmala Sitharaman's sixth budget is expected to focus on two key areas: increasing deductions for medical insurance premiums and simplifying the capital gains tax regime. Watch the Video
#budget2024 #interimbudget #indianeconomy
#incometax #taxbudget #nirmalasitharaman #lokdabhaelection #budgetexpectatations #bankingsector #budgetforwomen #budgetforfarmers #budgetforagriculture #railwaybudget #budgetsharemarket #realestatebudget #housingbudget #housingschemes
~PR.147~PR.100~
#budget2024 #interimbudget #indianeconomy
#incometax #taxbudget #nirmalasitharaman #lokdabhaelection #budgetexpectatations #bankingsector #budgetforwomen #budgetforfarmers #budgetforagriculture #railwaybudget #budgetsharemarket #realestatebudget #housingbudget #housingschemes
~PR.147~PR.100~
Category
ЁЯЧЮ
NewsTranscript
00:00 Hello and welcome to Good Returns. My name is Shruti Sarkar and today we have Amit Chhabra,
00:06 Chief Business Officer of Policy Bazaar. A warm welcome to Amit. Thank you for joining
00:12 us. Thank you. Thank you, Shruti. Pleasure to be here.
00:18 I will straight get to the point. The interim budget is on 1st of February and everybody
00:26 is talking about it. It's a vote on account budget. So the main full budget will be only
00:33 after the Lok Sabha elections in July. So if I had to ask what is your overall view
00:40 of the budget? Something that you're expecting, something probably you're not expecting.
00:47 Let's talk about it. See, I think while I understand this is,
00:55 this is, you know, this may not be that, this is like an interim budget, but I think
00:58 it is, I would say at the same point, it is also very important, you know, with the coming
01:03 elections, etc. So we would expect, you know, some concrete decisions, measures, etc. being taken.
01:11 And see, you also look at the macro picture, where India is today, you know, in the entire
01:16 world economy. A lot of economies in the world are struggling right now. You know, there is
01:21 inflation, interest rates are very high. A lot of countries, you know, in the Asia region are
01:27 struggling with, you know, because of various things. I think India, you know, is coming out
01:33 as a very shining example right now. It's coming out a very shining example of a country which is
01:38 being managed very well, financially very, very, very, you know, very stable and growing and
01:44 working on the right things, making India as a big initiative, which is helping, you know,
01:49 helping, helping reduce deficits and sort of making India more and more self sufficient. So
01:54 I feel that, you know, that that is the theme that the budget will also, you know, will also,
02:01 will also tend towards, where we try to promote the core, I would say the core,
02:08 the core feelings or the core sort of benefits, which, you know, which are the country we are
02:14 working towards. So, for example, promoting manufacturing in India instead of importing,
02:19 I think that is one key theme that everybody's been working on. A lot of, a lot of stuff has
02:24 happened around that. So that we, you know, we see that going forward as we see, as you know,
02:30 as we get into the budget. I think the one key area where, again, a lot of work has happened,
02:35 and I'll go slightly, you know, into financial services and insurance as a category, is, you
02:42 know, that there has been a lot of work that, you know, that the government and the government
02:47 authorities around insurance specifically, you know, so just to give you a sense, five years back,
02:54 insurance was very tightly controlled, which meant that making any changes in insurance was
03:00 difficult, making, launching new products, making changes in insurance policies was very difficult.
03:06 What has happened in the last five years is, you know, with great support and great sort of
03:12 great leadership by the IRDAI and the government of India, insurance has become a very, very
03:17 progressive, extremely progressive sector. Companies are now able to launch products on
03:23 the fly. There is no approval required, which earlier was a long, tedious process. Now it is
03:29 something called use and file, which means you can actually start selling a product and apply for
03:34 approval later. So there's a lot more, I would say, realization that has happened in the insurance
03:39 sector also. And that has really helped, you know, you see the growth numbers, insurance as a sector
03:45 has been growing rapidly. So I think that theme has also played out over the years, you know, and
03:51 I think as we look forward to the budget, I feel that, you know, the same theme will play out. The
03:58 one area I feel or rather two areas I feel where India still lags as a country and there is still
04:05 a way to go compared to the more developed markets, I think first is income protection.
04:09 So by that, what I mean is, you know, in very simple terms, if today, you know,
04:14 if there is a person who's the earning member of a family and tomorrow, you know, if the person
04:18 passes away because of some reason, is the income protected for the family or not? I think that is
04:24 one big thing. And in India, term insurance penetration is quite low. It's improving
04:29 obviously by leaps and bounds, but it still remains quite a low number. So there is no
04:34 income protection available to a very, very large number of families. So that is one. And second is
04:40 health protection. That's the other thing. And unfortunately, you know, in the last three,
04:44 four years, COVID came, you know, medical inflation has gone up significantly. Healthcare
04:50 has become very, very expensive. So how do you protect your healthcare from a financial standpoint
04:56 through health insurance? I think that is the other thing where also India as a country
05:00 struggles a bit because the penetration levels are still quite low. While I think over the last
05:05 a few years, there has been significant growth. There is now more awareness, a lot of stuff that
05:10 has happened at the insurance regulation end, which has increased this penetration, but still
05:14 that number is quite low. You know, different estimates would typically see that for voluntary
05:19 health insurance, the number is as low as 5-6%. Now, this is much lower than where it should be,
05:25 specifically for a young economy like India, where people don't have those kinds of disposable
05:32 incomes, that if something bad happens to somebody health-wise, they actually will not have any money
05:37 left. So I think these are the two large themes I will specifically, you know, I hope that the
05:43 upcoming budget promotes people to, you know, to spend on, to think about that protecting their
05:50 income and protecting their healthcare financing. I think these are the two things which are
05:54 extremely important as we go forward. Sure, sure. Very well said. You did speak about,
06:01 you know, other Asian countries who are going through a really bad phase, for example,
06:05 I'm sure, you know, Pakistan, a huge inflation, this food crisis, this Sri Lanka,
06:10 which went through humanitarian crisis last year, huge debt. So compared to those countries,
06:17 probably India is doing much better. You also spoke about, you know, global, global developed
06:23 countries facing high inflation. Yes, you know, considering that the US inflation is still much
06:29 higher than the Fed's target of 2%. And although it has pulled off from a high of 9%, it is still
06:37 not there. Probably India, in India, it's, it's, we are in a much better state. However, if, like
06:45 our Prime Minister, Narendra Modi said that, you know, we are going to be a $5 trillion economy
06:50 very soon, the third largest in the world. In your view, how would that happen? You know,
06:58 what's your outlook towards it? See, I think all the, all the key elements, I feel are, you know,
07:06 are, are at the right place. You know, there is, there is availability of capital for, for a
07:13 business if they want to deploy capital and, you know, grow. There is availability of capital.
07:18 Although the core regulatory elements are all in place, you know, business is fairly,
07:23 the whole environment is fairly supportive to do business. In terms of, you know, in terms
07:30 of resources, again, India is an extremely young economy. There is a large force of people who are
07:35 well educated and, you know, and, and, and who are enthusiastic and open working. So unlike,
07:40 unlike some of the developed countries, you know, we have a very large young force, you know, which,
07:45 which is ready to get into any sector, be it manufacturing, IT, etc. Then I think, if you
07:51 look at, if you look at all the, you know, all the relevant sectors, so the sectors that are
07:56 grouping, you know, India is increasingly becoming more and more, you know, stronger, be it,
08:01 be it in terms of information technology, be it, you know, or as a sector as well, you know. So we
08:06 are seeing, we are actually, interestingly, what has happened is in India, because of the whole
08:10 Make in India initiative, you know, that's been, that's been taken up, we're seeing, we're seeing
08:15 Indian, Indian companies who are manufacturing in India, they're only growing from here on,
08:20 you know. So, so I think that that target of $5 trillion is not very far away. You know, I can't
08:26 comment how much time it will take, but, but I think it's definitely heading in the right direction
08:30 is, is, you know, is how it's clearly visible. And, and very honest, you know, I would, I have a
08:36 very, very straight view of things also, because, see, if you, what we listen to here, you know,
08:44 that that is, that is one, but if you actually listen to what, let's say, people outside the
08:48 country are saying, that is a very clear view of what is what is the picture, right? Because they
08:53 are not colored by let's say, what is being, what is being written or said, if you listen to a lot
08:59 of NRIs, a lot of people who are staying outside the country, there's actually a lot of reverse
09:04 brain drain that has now started. A lot of people want to come back to India now, because they
09:08 realize this is where growth is, this is where, you know, capital is increasing. This is where
09:13 it's, it's much faster in terms of growth versus let's say, you know, any other developed market.
09:17 So there's a lot of positivity outside India about India. I think that, that to me is, is, you know,
09:24 very simple. It's a very simple sign as to how India is doing as a, as an economy. So I think,
09:31 yeah, the target is not very far away, but we have all the right elements in place. And it's,
09:35 you know, just about putting your head down and, you know, keep working towards it.
09:38 Absolutely. Moving on, you spoke about, you know, healthcare expenses, healthcare inflation,
09:45 which is rising. So do you think extending tax exemption for healthcare, you know, health savings
09:52 accounts will benefit the people in the country? Also, I have an additional question, you know,
10:00 GST paid on employee health insurance makes it even more expensive. So do you have any
10:06 suggestions that, you know, how the government can incentivize it and make it, you know,
10:14 much easier for probably poorer people? Absolutely. I think the two points that
10:20 you raise are, you know, both very, very critical points. So see, the first thing is this whole
10:28 section 80D, you know, where you get a tax benefit, if you buy health insurance, this limit
10:34 was defined very, like many years ago. It's not something which is new, but what has happened in
10:40 the last few years is because of medical inflation, these limits have now sort of become outdated.
10:46 So just to give you, you know, just to go deep into that, today, if I am 60, I am less than 60
10:52 years old, then if I buy a health insurance policy up to 25,000 rupees for me and my family,
10:58 then I get medical exemption up to that 20,000 rupees amount. But the reality is because of
11:04 medical inflation in the last, you know, last so many years, health insurance has become expensive.
11:09 So that 25,000 rupee limit is actually not sufficient enough for me to support me and my
11:16 family's health insurance. So what ends up happening is, you know, at times while some
11:20 customers do take, you know, they spend more money and get a good comprehensive cover for
11:25 their family, a lot of people also end up shying away from taking the full amount because, you
11:32 know, that additional incentive of tax saving has gone away. So what I would say is that, you know,
11:37 one of the things that could be looked at in the budget is if these limits of section 80D can be
11:42 extended to match up to the current levels of medical inflation that are there. And I would
11:48 say one should look at at least a 50,000 rupee limit for less than 60 years of age and 1 lakh
11:53 rupees limit for more than 60 years of age people when they're buying health insurance policy.
11:58 This will encourage people to buy a good comprehensive health insurance plan for
12:02 themselves. So that is point number one. This also applies, you know, so point number two is
12:08 around GST. I think that's another important point. And I would say it's not linked to only
12:13 corporate policy, as you mentioned, but it's also linked to retail policies as, you know,
12:16 as individuals, when we buy our own health insurance policy or even term life insurance
12:21 policy for that matter, it is 18% GST applied. Now, if you take a step back and understand
12:29 when should a high GST amount be applied, it should be applied where it's some luxury item,
12:34 it is some discretionary expense. That is when you want to apply a high GST amount, right? So,
12:41 for example, if or applied on somebody who's, you know, spending it on non-essential items,
12:46 I would say, right? So if somebody is doing a foreign trip, you may apply it because,
12:50 you know, foreign trip is not a, it's a discretionary spend. It's not a mandatory
12:55 thing to, you know, go outside the country or to buy an expensive car. But comparing health
13:01 insurance or term insurance with, you know, with discretionary spend, I feel is probably a bit,
13:08 you know, it's not right because health insurance and term insurance are two protection instruments
13:14 which come handy when, you know, when hell breaks loose. You may get cancer and you may need to pay
13:20 a bill of 20 lakh rupees. That is when health insurance comes handy. Nobody has 20 lakh rupees,
13:25 you know, handy with them to just give it to a hospital. Similarly, if the earning member of
13:30 the family passes away, then you need those one crore, two crore rupees to, you know,
13:35 to sustain your lifestyle, to pay the school fees of your children and so forth. These are
13:40 not discretionary spends at all. Then why should they be coming under the, you know, under the
13:46 umbrella of 18% GST? I think that part must be looked at very, very carefully and should be
13:52 addressed in the budget because one should always promote health protection and income protection
13:58 because they are, you know, in the long run, they are essential to, you know, to a good,
14:04 healthy society because you don't want people being, you know, selling off all their savings
14:08 or, you know, selling off their houses to pay a hospital bill. But that is what will happen if
14:13 people don't have health insurance policy. So I think health protection and income protection are
14:18 two things which have to be only encouraged and a high GST amount acts as a deterrent to that.
14:24 So these are the two things that one must look at in the upcoming budget.
14:27 Thank you. Very, very intelligent answer. I think this is where, you know, we are a little
14:33 probably different than the developed countries where policies are very, you know, sorted
14:38 for almost all sectors. Moving on, Amit, I have, so do you expect any kind of welfare schemes that
14:49 could be announced in the budget, in the interim budget now?
14:53 So again, probably not my place to comment on this, but one of the things that we are hearing
15:01 from a health insurance perspective is that the health insurance, the universal health insurance
15:06 scheme called Ayushman Bharat, there may be an extension to that where the sum insured will be
15:13 increased and there may be an option for, you know, for consumers to pay and extend their coverage.
15:20 That is something that we are hearing. Apart from that, yeah, probably not my place to answer,
15:26 you know, what are the welfare schemes at an overall level might come up.
15:30 Sure, sure. Right. I think I got what I wanted. Amit, is there anything that you may want to add
15:38 that I may have missed asking you? Please feel free to.
15:42 Sure. So I think one more point I wanted to add. See, India as a, again, because we are a young,
15:50 fast developing, fast maturing economy, one of the things that we have never as a country been
15:57 very strong on is pensions. You know, so obviously, India has had a history of pensions in the sense
16:03 that every government job used to give pensions and, you know, that's, and that now supports
16:07 livelihood of a lot of families. But as you know, one, that whole structure is now changing. Not
16:14 every government job is pensionable now. Private jobs are definitely not pensionable. So I think
16:20 one area where India has been weak is pensions. You know, people don't really work on pension
16:26 related investment products, you know, from a young age, because everybody's thinking of right
16:31 now, of, you know, of getting money now and, you know, and investing that. But what do you do when
16:37 you're 60, 70 years old, when you don't have a running income and your investments go away?
16:41 The future may turn bleak because of that. I think one of the views that we must have,
16:47 and we must work towards as a country is pensions, which means protecting my income
16:53 when I am not earning as a, you know, as a, as an earning member, when I'm 60, 70 years old,
16:58 when I have no running income, how do I ensure that I got a running income?
17:01 That is what pensions provides. Now, today, there are various pension plans available. But
17:07 again, do you know, as a discouragement, they are actually taxable, which means that,
17:14 that you know, if today I, you know, I invest in a pensions plan, the return that I get after
17:20 20, 30, 40 years, it will actually be taxed at an income tax rate. This again, I think is a big
17:26 deterrent. And what I would, I would feel is that pension, the income from pension should not be
17:33 taxable, because that will, that will, you know, make sure that it encourages all the, you know,
17:39 everybody to, to invest in pensions as a category also. And see, today, we don't realize how
17:44 important pensions are. But, you know, when we move into, into, you know, into a stage where,
17:49 let's say today, the US or some of the more developed European countries is where
17:53 largely the population is aged, that is when this will start to hurt. And you know, at that point,
17:59 a lot of irreparable damage would have happened. So, extremely important that as a, as a, you know,
18:05 as a setup, as a country, as an economy, we also work on pensions. And there should be enough
18:10 encouragement for, for, you know, for every citizen of the country to, to, to work on,
18:15 you know, to invest in pensions. The NPS is a great example of that. I think that's a great start.
18:19 But again, typically, the spend there is limited. I think we should, we should be encouraging
18:25 everybody in the country to spend more on pensions, so that the future and specifically,
18:30 this I'm talking about the very long term future, not, not the next 5-10 years, but I'm talking 30
18:34 years later. I think that future will be secure. So, I think that's the other thing we must,
18:40 we must sort of work towards as we, as we go forward.
18:43 Absolutely. Fantastic. Thank you, Amit, for answering all those questions.