(Please enter words below)

Please enter your details

Please enter the name
+91 Please enter the mobile number
Please select the product

Live Chat

May I help you?

Begin Chat

Budget 2019 Stays away from Subsidies; Focus on Long-Term Economic Development

Posted by - Sanjeev Mantri, Executive Director
July 09 2019

Union Budget 2019: With change of guard at the finance ministry level and the traditional briefcase giving way to ‘Bahi-khata’, the winds of change seemed to be connoting a radically different Budget. While one didn’t witness ‘out of the box’ ideas in the Budget presented on July 5, it was a statement of purpose with the intent to place the right building blocks in place to get India to the milestone of a $5 trillion economy in the next five years.

The focus of the finance minister was rightly on getting the enablers in place with emphasis on core infrastructure namely roads, electricity, water supply, etc. More importantly, the Budget laid stress on the facilitating elements—education, driving use of digital payments, promoting entrepreneurship and alleviating the fears of the startup ecosystem, etc. The fact that these mega changes are being planned while ensuring fiscal prudence and staying clear of the ‘subsidy’ path is much appreciated and says a lot about the intent of policymakers to move away from populist measures to those that will truly facilitate long-term economic development.

Alleviating pain points

At the same time, the Budget looks at alleviating the immediate pain points being faced by the economy. Non-banking financial companies (NBFCs) have faced turbulent times as defaults hit the sector hard. It was extremely critical to address this issue given the high risk of the contagion spreading across the sector and to the broader economy. The Budget has announced specific steps to address this problem. At the same time, the move to re-capitalise public sector banks will help reduce the strain on banking system. Measures such as tax incentives for affordable housing should help revive demand for the real estate industry which has otherwise been saddled with unsold inventory.

In a move that aligns with India’s intent to become a global hub for electric vehicles, the introduction of tax incentives and other benefits amounting to around `3.5 lakh should rejuvenate the electric vehicles segment.

FDI in insurance intermediaries

For the insurance industry, the move to allow 100% FDI in insurance intermediaries is a welcome step. With long-term capital getting infused in insurance intermediaries, they will be able to invest in expanding and enhancing their distribution capabilities thereby ensuring that insurance products reach the smaller towns and rural areas while effectively addressing the needs of the current customers.

The Budget ticks the right boxes on many counts; however, there are some areas where it has missed the opportunity. The auto sector has been grappling with declining demand for a while and this has accentuated in the last few months. No remedial measures were announced in the Budget to address this issue.

Similarly, the government has stayed away from providing stimulus to other sectors to improve consumer demand, adding to the risk of the Indian growth engine stuttering, at least in the short term. When it comes to insurance, the lack of incentives for critical segments such as health and home insurance is an opportunity lost.

To conclude, I believe that the Budget 2019 does well by focusing on enabling measures for India’s long-term economic progress, though it could have done more in some areas where urgent measures were needed to be taken for immediate relief.

Leave a comment

Related articles


August 2016
  • Insurance e-commerce norms will push insurers to innovate

    In a span of two decades, the sector has grown to a $1.67-trillion industry. India, which is touted as the world’s fastest growing major economy, is also among the fastest growing e-commerce markets. For a country that registered $3.8 billion in sales in this sector in 2009, the industry is expected to grow 10 times to $38 billion by the end of 2016.
    Posted By - Sanjeev Mantri
    Read More


March 2017
  • Trends in General Insurance

    A lot is happening in the general insurance space and Mr. Sanjeev Mantri shares his views
    Posted By - Sanjeev Mantri
    Read More


April 2017
  • BS-IV rule may impact business

    Sanjeev Mantri, Executive Director, ICICI Lombard, largest private general insurance company, shares his views on recent developments in the insurance industry.
    Posted By - Sanjeev Mantri
    Read More


September 2017
  • Artificial Intelligence and Healthcare

    Artificial Intelligence (A.I.) has the potential to make people stay healthy without the need for a doctor, or at least not as much, at reduced costs.
    Posted By - Sanjeev Mantri
    Read More


January 2018
  • Non-Life Insurance Expectations from Union Budget 2018

    Click here to know expectations of Sanjeev Mantri – Executive Director, ICICI Lombard GIC from Union Budget 2018 for Non-Life Insurance Industry.
    Posted By - Sanjeev Mantri
    Read More


April 2018
  • Have Feet, Will Run

    Sanjeev Mantri, Executive Director ICICI Lombard General Insurance talks about how running has not only helped him keep healthy but also how it has made him fearless, optimistic and goal-oriented.
    Posted By - Sanjeev Mantri
    Read More


December 2018
  • ICICI Lombard sets up in-house Digital Arm to Tap Growing Internet Market

    ICICI Lombard sets up in-house digital arm to tap growing internet market, says Sanjeev Mantri, Executive Director – ICICI Lombard General Insurance Company Ltd.
    Posted By - Sanjeev Mantri
    Read More


August 2019
  • Corporate Social Responsibility at ICICI Lombard

    Sanjeev Mantri, Executive Director, ICICI Lombard General Insurance talks about CSR activities of ICICI Lombard
    Posted By - Sanjeev Mantri
    Read More