Budget 2025 Expectations Updates: Insurance sector looks for reforms to boost health coverage and address affordability

The Confederation of Indian Industry (CII) expects the RBI to cut benchmark interest rates to support growth and is calling for targeted interventions to boost job creation, particularly in labour-intensive sectors like apparel, tourism, and real estate. CII President Sanjiv Puri also emphasized the need for labour reforms to enhance job opportunities. Ahead of the Union Budget, Puri flagged concerns over persistent food inflation driven by climate change, suggesting that food inflation should be de-linked from monetary policy. He also advocated for addressing the impact of Chinese imports, urging the government to implement anti-dumping duties more swiftly on sectors such as steel and chemicals. CII has proposed measures like reducing excise duty on fuel to curb inflation, lowering marginal tax rates for income up to Rs 20 lakh, and offering incentives like PLI 2.0 for the garment industry to stimulate growth.

The India Energy Storage Alliance (IESA) has urged the government to implement a uniform 5% GST on all battery technologies, including lithium-ion, to foster growth in the sector. IESA President Debi Prasad Dash highlighted the disparity in GST rates, with lithium-ion batteries taxed at 18% and other chemistries at 28%, while electric vehicles are taxed at 5%. Ahead of the Union Budget, Dash also called for increased support for domestic manufacturers of battery components like cathodes, anodes, and electrolytes, suggesting a Rs 9,000 crore PLI scheme to boost the 'Make in India' campaign. He further recommended steps to protect the nascent industry from rising imports, especially from China, and suggested increasing customs duties over time to ensure competitive pricing for Indian companies.

ICICI Securities expects the FY26 Union Budget to prioritize fiscal discipline, focusing on capital expenditure (capex) to reduce the fiscal deficit and shield India from external shocks. The budget is expected to limit election-related spending and welfare outlays, benefiting cyclical sectors.

The brokerage highlights external risks, including potential disruptions to global trade due to Donald Trump's policies and rising US bond yields, which could challenge India’s export growth. While India’s fiscal and current account deficits are manageable, inflation concerns and a widening trade deficit pose risks to growth in FY25.

As the Union Budget 2025 approaches, taxpayers are hoping for key reforms. Here’s a summary of their top requests:

--Income Tax Slab Relief: Parijat Garg suggests raising the 30% tax rate threshold from Rs 15 lakh to Rs 20 lakh to make the new tax regime more attractive.

--Higher Section 80C Deductions: Khyati Amlani calls for increasing the Rs 1.5 lakh deduction limit under Section 80C to Rs 3 lakh and including it in the new tax regime.

--Lower Tax on FD Interest: Garg proposes taxing long-term FD interest at a reduced rate of 12.5%, in line with LTCG tax, for FDs held longer than 36 months.

--Increase in Basic Exemption for Old Regime: Tejash Gandhi recommends raising the basic exemption limit from Rs 2.5 lakh to Rs 5 lakh.

--Capital Gains Tax Reforms: Experts push for reinstating indexation benefits for debt funds and a simplified capital gains tax structure.

--Education Deductions: Garg suggests introducing a Rs 50,000 allowance for upskilling programs to support career growth.

--Enhanced Housing Loan Benefits: Ritika Nayyar proposes raising the housing loan interest deduction cap from Rs 2 lakh to Rs 3 lakh, benefiting homebuyers.

EY India expects the upcoming Union Budget for 2025-26 to focus on stimulating demand through measures like tax simplification, private sector capital expenditure (capex), and reducing personal income tax, especially for lower-income groups. With over Rs 31 lakh crore tied up in income tax disputes as of 2023-24, EY stresses the need to address the backlog at the Commissioner of Income Tax (Appeals) and promote alternative dispute resolution methods. EY also anticipates initial steps toward reforming the direct tax code, with a focus on reducing litigation and improving taxpayer services. Additionally, the Budget is expected to emphasize fiscal consolidation, investment-driven growth, and targeted tax reforms, including rationalizing capital gains taxation and addressing compliance complexities for SMEs. To ensure sustainable economic growth, reducing the fiscal deficit and debt-to-GDP ratio is critical, alongside boosting private investment through interest rate reductions and enhanced public spending.

Faraz Alam, Founder of Tole Lifestyle, emphasizes that the Union Budget 2025 should focus on sustainability and employee development within the retail sector. He suggests that encouraging retailers to adopt green practices, such as sustainable packaging and energy-efficient systems, aligns with the industry's procurement goals. Additionally, funding for skill development programs aimed at enhancing customer service, digital marketing, and technology use for retail workers is crucial to building a future-ready, "smart" workforce. Managing these aspects effectively will help the retail sector thrive in a competitive and sustainable landscape.

Ridhima Kansal, Director of Rosemoore, emphasizes that MSME retailers are hoping for tax adjustments and schemes in the upcoming Union Budget to ease operational challenges. She advocates for simplified GST structures and reduced compliance costs to promote ease of doing business. Kansal also suggests offering tax rebates or subsidies for small retailers using electronic payment and e-commerce systems. Additionally, she proposes the creation of a fund for low-interest loans to help ease working capital constraints, enabling MSMEs to invest in growth and innovation, thereby supporting the sector's contribution to the economy.

The Congress party has called for urgent and bold measures in response to the downward revision of GDP growth estimates, which it sees as signaling a slowdown and investment uncertainty in the country. AICC general secretary Jairam Ramesh highlighted that the Union Budget is set against a pessimistic economic backdrop. He emphasized the need for income support for the poor, higher MGNREGA wages, and increased minimum support prices (MSPs). Ramesh also urged for a major overhaul of the “comically complex” GST system and demanded tax relief for the middle class.

Aditya Sesh of Basiz Fund Services, anticipates modest changes in tax exemptions, with a possible increase in the minimum tax slab under the new tax regime. He suggests that the government's focus will shift towards improving tax compliance and addressing tax evasion, especially among high-income earners. Sesh also highlights the potential introduction of a new Direct Tax Code to modernize tax laws. He expects continued support for initiatives like Make in India, Ease of Doing Business, and infrastructure development, with special attention to MSME and manufacturing sectors to stimulate private sector capital expenditure and ensure balanced economic growth.

Ashish Kukreja of Homesfy, highlights key proposals to support India’s real estate sector in the Union Budget 2025. He recommends increasing the tax exemption limit on housing loans from ₹2 lakh to ₹5 lakh, reintroducing the Credit Linked Subsidy Scheme (CLSS) for first-time homebuyers, and reinstating the 100% tax exemption for affordable housing projects. Kukreja emphasizes that these actions, alongside potential interest rate reductions, would improve affordability, stimulate demand, and promote sustainable growth, aiding India’s goal of a $5 trillion economy.

Sandeep Agarwal of Greenzo Energy, advocates for decisive government measures to make green hydrogen economically viable and position India as a leader in the global green hydrogen revolution. He suggests introducing subsidies, tax incentives, and mandating a 20% substitution of fossil fuel imports with green hydrogen. Agarwal urges a reworked Production Linked Incentive (PLI) scheme that prioritizes production and simplifies compliance. He also calls for the removal of import duties on green hydrogen-related equipment, establishing clear safety regulations, and investing Rs 1,000 crore in testing and certification labs. Additionally, he recommends subsidies for solar-powered hydrogen production and innovative financing for electrolyser manufacturing.

India’s electricity generation grew at its slowest pace in 2024 since the COVID-19 pandemic, with a 5.8% annual increase to 1,824.13 billion kilowatt-hours (kWh), according to data from the federal grid regulator, Grid-India. Growth in the second half of the year averaged just 2.3%, a sharp decline from the 9.6% rise in the first half. This slowdown in electricity generation mirrors the broader softening economy, which experienced its slowest growth in nearly two years in the quarter ending September 30.

Josh Foulger, President of Electronics at Zetwerk Manufacturing Businesses, sees the Indian ESDM (Electronics System Design and Manufacturing) sector on the verge of explosive growth, potentially replicating the success of the Indian IT sector. While acknowledging the importance of initiatives like the Production-Linked Incentive (PLI), he emphasizes the need for a dual approach—boosting value addition and aggressively pursuing export markets—to fully unlock the sector's potential. At Zetwerk, they are dedicated to strengthening both Indian Value Chains (IVCs) and Global Value Chains (GVCs) by identifying value addition opportunities within India and expanding strategically into the US and European markets. Foulger believes that an export-driven strategy, combined with significant growth opportunities in sectors like IT hardware, consumer durables, and smart home devices, could help propel the Indian ESDM sector to a $500 billion annual revenue. He commends MEITY's efforts in creating an enabling environment for this transformation and underscores that innovation and collaboration will be essential to realizing this ambitious goal.

The Union Budget for 2025 will be presented on February 1, with the Ministry of Finance unveiling the highly anticipated Economic Survey 2025 just a day earlier. The Economic Survey is a critical document that provides a comprehensive analysis of India’s economic performance and offers valuable insights that shape the upcoming Union Budget. It highlights key themes, challenges, and areas of focus for the government’s financial strategy. As preparations for the budget intensify, understanding the Economic Survey's content and significance is essential. Dive deeper here

The insurance industry is optimistic that these reforms will help make health insurance more accessible and sustainable, providing vital protection to a broader segment of the population. As the Union Budget approaches, these measures are expected to play a crucial role in improving healthcare access and affordability for all citizens.

"A health regulator overseeing hospital pricing and service standards could help manage this issue by ensuring consistency and fairness in medical treatment costs," Singhel said. Discussions are ongoing among the Ministry of Health, the National Health Authority (NHA), and the Insurance Regulatory and Development Authority of India (IRDAI), and the insurance sector hopes to see tangible progress in establishing such a regulator.

(From PTI)

With escalating medical costs and rising hospitalisation expenses, the sector has called for the creation of a dedicated health regulator. Singhel highlighted that insurers face challenges adjusting their product prices due to medical inflation, which can spike by nearly 15% within a three-year period.

Singhel also advocated for a 100% tax exemption on premiums for protection-oriented products, including health insurance, home insurance, personal accident coverage, and term life insurance. Such measures, he believes, would incentivize individuals to seek personal protection and promote broader insurance penetration, reinforcing financial resilience and security for citizens.

Srinivasan Gopalan, MD & CEO of Galaxy Health Insurance Company, also called for reforms to Section 80D of the Income Tax Act, which limits tax deductions for health insurance premiums. He proposed increasing the limit to Rs 50,000 for all individuals and Rs 1,00,000 for senior citizens, and making Section 80D applicable under the new tax regime.

Additionally, Gopalan recommended changes to Rule 6E, which currently allows unexpired premium reserves to be calculated at 50%, to follow the 1/365 method as permitted by IRDAI in insurance companies’ financial statements.

(From PTI)

One of the sector's primary concerns is the high GST rates on health insurance premiums. Tapan Singhel, MD & CEO of Bajaj Allianz General Insurance, pointed out that the current GST rate has deterred many from securing adequate insurance coverage, especially affecting the “missing middle” population. Singhel emphasized that health insurance should be treated as an essential service rather than a luxury.

"Reducing the GST on health insurance premiums would make them more accessible. If a reduction isn't feasible, alternatives like a full tax deduction for health insurance premiums under Section 80D should be explored," Singhel suggested.

In another key demand, AIPMA proposed the creation of plug-and-play facilities that would offer ready-to-use infrastructure to micro, small, and medium enterprises (MSMEs). These facilities would reduce the financial burden on smaller businesses and help them start operations seamlessly, fostering quick scaling and growth.

AIPMA has also requested a 20% subsidy for the purchase of capital equipment for recycling, which would help manufacturers improve their recycling processes and contribute to reducing plastic waste.

In line with the request for more industry support, AIPMA called for the establishment of a Technical Upgradation Fund (TUF) for the plastics processing sector. The fund would be allocated Rs 2,500 crore over five years and modeled after the successful Technology Upgradation Fund used by the textile sector.

In addition to the PLI scheme, AIPMA has called for a reduction in Goods and Services Tax (GST) rates to incentivize the recycling industry. Specifically, the association has requested that GST on plastic waste and recycling machinery be reduced to ‘nil’ to encourage more sustainable practices in the industry.

Furthermore, AIPMA has asked for a reduction in GST on the conversion cost of recycled plastic granules from 18% to 5%. This move aims to make the conversion process more affordable and sustainable, promoting the recycling of plastic waste.

Highlighting the government’s flagship housing initiative, Hiranandani stressed the importance of incentivizing affordable housing under the Pradhan Mantri Awas Yojana (PMAY). He urged the finance minister to allocate more resources and introduce policy measures to ensure the scheme’s continued success in providing housing for all.

Apart from housing, industry leaders from other key sectors also shared their recommendations with the finance minister. GMR Group Business Chairman BVN Rao, Afcons Infrastructure Limited Managing Director S Paramassivan, and ReNew Group Chairman Sumant Sinha were among those present during the pre-budget consultations.

Another key issue raised during the consultations was the treatment of capital gains tax on property transactions. Hiranandani pointed out that current laws exempt capital gains tax if the proceeds from the sale of a property are used to purchase up to two houses. However, he highlighted a gap in the policy: if an individual has three children and wishes to buy three houses, the exemption does not apply.

He urged the finance minister to address such loopholes, enabling taxpayers to better utilize their gains for family housing needs.

Hiranandani said it’s important to promote rental housing alongside ownership housing. While previous budgets have primarily incentivized homeownership, last year’s provision for industrial workers’ rental housing was a step in the right direction. Hiranandani called for expanding such incentives to address the needs of those who may not be able to afford homeownership but require affordable rental options.

The council also pressed for granting infrastructure status to the housing sector. Such a move, Hiranandani argued, would improve access to funding for developers, particularly in the affordable housing segment. He noted that this year marks the first time in over 40 years that the affordable housing sector has seen negative growth, underscoring the need for immediate government intervention.

AIPMA Chairman Arvind M Mehta highlighted the vast growth potential for India in the plastics sector, pointing out that China’s exports of plastic finished goods are currently 25 times higher than India’s. This disparity underscores the opportunities for India to scale up its plastic exports, said Mehta.

To support this growth, AIPMA proposed the introduction of a PLI scheme that would incentivize manufacturers to scale their operations and enhance production capabilities.

NAREDCO has recommended raising the tax deduction limit on housing loan interest payments from Rs 2 lakh to Rs 5 lakh under the Income Tax Act. According to Hiranandani, the current cap is insufficient to meet the needs of homebuyers, especially in urban areas, and increasing it would provide substantial relief to middle-class families while encouraging homeownership.

As pre-budget consultations gain momentum, the National Real Estate Development Council (NAREDCO) has urged the government to introduce significant reforms in the housing sector. NAREDCO Chairman Niranjan Hiranandani highlighted the urgent need for policy interventions to revive the struggling affordable housing segment.

The Union Budget for the fiscal year 2025-26, to be presented by Finance Minister Nirmala Sitharaman on February 1, comes just days before the Delhi Assembly elections. Responding to queries about the potential overlap, CEC Kumar clarified that the Election Commission would write to the Cabinet Secretary, ensuring that no Delhi-specific provisions are included in the budget that could influence voter sentiment.

The Election Commission of India has directed the Cabinet Secretary to ensure that the Union Budget for 2025-26 does not include any provisions specifically targeting Delhi, as such measures could disrupt the level-playing field ahead of the state assembly elections. Chief Election Commissioner (CEC) Rajiv Kumar made this announcement on Tuesday, emphasizing the need for impartiality in the lead-up to the polls.

The budget is also expected to address broader macroeconomic challenges such as inflation, fiscal deficit control, and export promotion. These measures will be crucial in steering India toward sustainable growth while maintaining financial stability.

As the nation gears up for this pivotal budget, the spotlight remains on how these announcements will impact businesses, consumers, and the broader economy.

Healthcare and education are likely to receive a significant boost, with greater allocations for public health infrastructure, digital education, and skill development programs. The focus on these sectors highlights the importance of long-term resilience and human capital development.

Startups and MSMEs are hopeful for tax breaks, improved access to credit, and new policies designed to encourage innovation and job creation. These sectors remain critical for driving entrepreneurship and employment in the country.

Capital expenditure by the government is expected to be a focal point, especially in the wake of slower GDP growth. Infrastructure development, particularly in roads, railways, and urban projects, could see increased budgetary allocations to stimulate economic activity.

The electric vehicle industry is optimistic about policy measures aimed at supercharging its growth. Enhanced incentives for domestic manufacturing, as well as granting infrastructure status to EV charging stations, are among the key expectations.

There’s growing pressure to reduce excise duty on petroleum products, a move that could ease inflationary pressures and support a virtuous cycle of increased consumer spending and economic activity.

Anticipation is running high among middle-class taxpayers, with hopes pinned on a revision of income tax slabs for individuals earning up to Rs 15 lakh annually. Industry bodies have also echoed this demand, urging the government to consider broader reforms to boost consumption and increase disposable income.

February 1 is just around the corner, and all eyes will soon be on Finance Minister Nirmala Sitharaman as she steps into the Lok Sabha at 11:00 am IST to present the Union Budget 2025-26. Marking her eighth consecutive budget, this year’s presentation holds immense significance as the Modi government’s third term tackles the delicate balance between boosting economic growth, ensuring fiscal responsibility, and addressing the nation’s social welfare needs.

What can you expect from Budget 2025? Will it bring much-needed relief for taxpayers, a push for infrastructure, or new incentives for industries? Stay tuned as we break down the key announcements, sectoral impacts, and how this budget could shape India’s economic trajectory.

Stay tuned to this page for live updates, expert analysis, and in-depth insights as the Union Budget 2025 unfolds.