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Interview of S Krishnamurthy,
Managing Director,
SBI Life Insurance Company
On Budget 2004-05
What is your opinion about Budget 2004-05?
The Budget is pro-growth and pro-employment generation, budget.
Has the Budget addressed the issues that the insurance
industry was looking forward to?
The proposed increase in the FDI Cap for the insurance
sector from 26% to 49% is a bold move and is definitely
going to help the industry grow at an expanded pace. We
can expect considerable foreign capital to flow in with
better products and technology for greater penetration in
the insurance market.
The increase of service tax from 8% to 10% will definitely
affect the insurance companies. The imposition of service
tax will force the insurance companies to take a re-look
on the pricing of products. The service tax is applicable
only on the risk component of the premium and therefore
it makes the tax computation somewhat difficult.
What benefits has it brought for the insurance sector?
The Finance Minister’s proposed budgetary measures have
given a lot of emphasis on the health insurance sector.
The awareness of health insurance is therefore bound to
grow.
The continuance of the existing income tax exemptions for
the insurance sector will help the industry to maintain
steady growth.
The Budget has raised the foreign direct investment
limit to 49%. Your comments
The proposed increase in the FDI cap for the insurance
sector from 26% to 49% is a bold move and is definitely
going to help the industry grow at an expanded pace. We
can expect considerable foreign capital to flow in with
better products and technology for greater penetration in
the insurance market.
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