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Centre likely to act on easing FDI norms for insurance

Finance ministry gets ready for drafting law, seeks law ministry's help

New Delhi:The government is expected take swift actions soon on the announcement made in the budget for fiscal year 205-26 by the finance minister Nirmala Sitharaman, including key issues such as hiking the FDI limit in the insurance sector to 100 per cent, containing inflation and rationalisation of GST rates among others, according to the top officials from finance ministry who interacted with media post budget in an event here.

The finance ministry will soon send the draft bill seeking to increase the FDI limit in the insurance sector to 100 per cent to the Union cabinet for its approval. “The finance minister has already given her nod. Now, we will prepare a draft bill with the help of the law ministry,” department of financial services (DFS) secretary M Nagaraju said in an interaction with reporters, adding that thereafter, the draft bill will be sent to the Cabinet for approval.

Sitharaman in her Budget speech proposed to raise the foreign investment limit to 100 per cent from existing 74 per cent in the insurance sector as part of new-generation financial sector reforms. “This enhanced limit will be available for those companies which invest the entire premium in India. The current guardrails and conditionality associated with foreign investment will be reviewed and simplified,” she had said.

On the inflation front, the government also said that it provided sufficient non-inflationary stimulus to the economy in the budget, which will push growth for the country. “We also have sufficient stimulus in the economy, a non-inflationary stimulus, which will promote savings, investment and growth. It will push incremental growth, work on the demand side and work on the supply side,” said revenue secretary Tuhin K Pandey.

Pandey also said that the Budget 2025 had to balance the competing imperatives as the Budget has a balanced growth and inflation mix, while keeping exchange rates, macroeconomic stability in mind and controlling the fiscal consolidation. “We have to have fiscal consolidation on the one hand because we don't want to be inflationary in our approach. If we try to stimulate the economy when we should not, it may turn inflationary and will reverse the very process of inflation control that we have been working at and will be counterproductive,” he said.

The official further said that the Budget has several demand-side measures and several supply-side measures, including the agriculture sector. “Food inflation, for example, if we are not able to really address some of those structural supply factors, it will keep hurting us year after year and it will keep our interest rates high. It doesn’t help industry, doesn't help the middle class, because people end up with higher equated monthly instalments,” he added.

On GST rate rationalisation, Pandey also said that enough experience has been gained with regard to implementation of GST and now the rates need to be rationalised in consultation with states. As the GST Council has already set up a group of ministers to suggest changes in GST rates as well as reduce slabs, the report on rate and slab rejig is long pending. It was expected that the GoM would submit its report in the last Council meeting in December, but it did not.

On a query, Pandey replied that GST brought in transparency in taxation post its implementation in 2017. “Now that we have certain experience in GST implementation, it will be very important to see how things will be going forward. The exercise needed much more consultation with states in the Council. The rate rationalisation is a work in progress and hoped that it is carried out,” he added

( Source : Deccan Chronicle )
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