Articles 219 views February 1, 2021

Finance Minister Nirmala Sitharaman has presented the Union Budget 2021 in Parliament today to encourage the growth of different sectors of the economy, including insurance. Be it the LIC IPO or the increase in FDI limit, the government has announced effective measures for the insurance sector. Let’s take a close look at insurance-related announcements made in the budget.

LIC IPO Slated to Complete in FY 2021-22

The Finance Minister has announced that the initial public offering (IPO) of LIC will be completed in 2021-22. In the previous year, the minister announced that the government had proposed to sell a part of its holding in LIC via IPO.

Disinvestment of Two Banks & General Insurance Firm

As announced in Budget 2021, two public sector banks and one general insurance firm will be disinvested this year. And this is in addition to the disinvestment of IDBI Bank. The disinvestment, coupled with the LIC IPO is part of the government’s disinvestment target of INR 1.75 lakh crore for FY 2021-22.

Social Security Benefits Extended to Gig and Platform Workers

Social security benefits will now extend to platform and gig workers as announced by the finance minister while delivering the Budget Speech. The government will set up a portal to collect information regarding gig and platform workers who work basically in e-commerce businesses. They don’t get salaries and thus are not eligible for benefits like provident fund, group insurance and pension. But now as per the Budget 2021-22 announcements, they will get these benefits.

FDI Limit in Insurance Hiked to 74%

The government has allowed a hike in the Foreign Direct Investment (FDI) in the insurance sector from 49% to 74%. According to industry experts, the increased FDI limit will bring an enhanced flow of capital to the insurance sector and benefit the economy. In 2012, the government of India had increased the FDI limit from 26% to 49%. An FDI is an investment by a company or individual made in one country into the business interests of another country.

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