Union Budget: Ahead of Budget 2025, the Union Government, according to a report by State Bank of India, should give significant focus to revitalizing the insurance and healthcare sectors in the country.

The report further recommended that the government must consider GST and tax exemptions on term and health insurance premiums, increase the share of the health budget to 5 percent of GDP, and rationalize GST rates for medical appliances on a uniform 5% -12%.

It said,"No GST/Tax on Term/Pure Life Insurance and health insurance premiums. In line with NPS, a separate deduction for life/health insurance in the new/old tax regime, say Rs 25,000/50,000. All the government-sponsored pension schemes, APY, PM-SYM, PM-KMY, and NPS-Traders may be brought under one umbrella."

As the report highlights, with insurance penetration in India dropping to 3.7 per cent in FY24 as compared with 4 percent in FY23 and 4.2 percent in FY22, what the hour demands are measures to achieve the mission of "Insurance for All by 2047" by IRDAI.

This includes a sharper fall in life insurance penetration to 2.8 percent, while non-life insurance remained unchanged at 1 percent.

To address this concern, the report noted that the government could consider exempting GST and taxes on term and health insurance premiums, encouraging more individuals to invest in these essential covers.

In addition, introducing a separate deduction under both the old and new taxation regimes for life and health insurance in the range of Rs 25,000-Rs 50,000 could encourage many more to obtain such policies.

Integrating government- sponsored pension schemes, like Atal Pension Yojana (APY), Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM), Pradhan Mantri Kisan Maan-dhan (PM-KMY) and National Pension Scheme for Traders could enhance access and efficacy.

There is a need to provide social security and income protection for families as well by specially designing an insurance programme for MSME employees. Moreover, another scheme is also advocated for MSME promoters to tide over business loss on account of uncontrollable factors.

India should aggressively increase its public health expenditure in the health sector. According to the National Health Policy 2017, it had proposed an attainable goal of 2.5 percent of the GDP to be accomplished by the year 2025, however, the report advised an increase to 5 percent for the population that is raising day by day and getting older with each passing year.

The healthcare cess proceeds can be used to fund public health programs. Imposing a proposed 35 percent GST slab on tobacco and sugary products would also fund public health programs.

Finally, rationalizing GST rates on medical devices to a uniform 5 percent-12 percent, instead of the current range of 5 percent-18 percent, would simplify compliance, enhance efficiency, and reduce costs for manufacturers and distributors.

These measures would strengthen insurance and health infrastructure in India, provide economic growth with social security for people.