Finance Minister Nirmala Sitharaman on February 17 said that the government is working on further reforms in the insurance sector, in which 100 percent foreign direct investment (FDI) has been allowed, to ensure that investments and profits remain in the country.
Speaking at a post-Budget interaction with industry in Mumbai, the minister said the insurance sector needs to broaden and deepen, with more players entering the market.
The Budget 2025 she presented on February 1 proposes to raise the FDI cap for the insurance sector from 74 percent to 100 percent.
"Looking at further reforms to opening sectors, bringing in more FDI in insurance. The insurance sector needs to broaden and deepen, we need more players. Guardrails are being put so that citizens' money towards premium payment for insurance is kept within the country. Investments and profits will have to be used here. Guardrails are being made so that our interests are not affected," Sitharaman said.
The government’s regulatory stance aims to ensure that premium payments made by policyholders remain in India and contribute to domestic investments rather than flowing overseas.
These measures are crucial for maintaining the financial security of policyholders and strengthening the country's insurance sector, she said.
‘Shaken up Income Tax Act’
Sitharaman also spoke about the overhaul of the Income Tax Act, saying the existing framework would be replaced by a new Act. A select committee of 31 Lok Sabha members has been formed to scrutinise the new legislation.
"We have shaken up the Income Tax Act. The old Income Tax Act will be replaced by the new Act. The select committee with 31 Lok Sabha members will look into its details. Over 60,000 inputs from people have come on the Income Tax Act. The select committee will invite stakeholders for comments on the new Act," she said.
Lowering debt
Highlighting a key difference in budgetary strategy, Sitharaman said the government borrowings are now directed primarily toward asset-creation rather than revenue expenditure.
"A big difference in the Budget making is reflected in our borrowings, which are going essentially only for building assets. The fiscal deficit glide path we shall reach for FY26. We will also now focus on debt to GDP; it will have to be brought down. Every measure will be taken to bring it down by 2030-31 to 50%+-1% without affecting health, nutrition, and asset building," she said.
She added that despite speculation, the government’s focus has not shifted from capital expenditure to consumption expenditure. "There is no shifted emphasis from capital asset building to consumption. Rs 16 lakh crore is the combined capex of the government and PSUs. The government's focus has not shifted from capex to consumption expenditure."
In her Budget speech, the minister said that from the financial year 2026-27, the government will target a fiscal deficit that will bring down its debt-to-GDP ratio in the 49-51 percent range by 2030-31.
Reform momentum
Reiterating the government’s commitment to regulatory reforms and easing compliance for businesses, Sitharaman urged states to follow suit by eliminating regulatory bottlenecks.
"We have kept the reforms going to remove stress on businesses to do compliance. I expect states would come forward to remove stressful compliance-related regulations for businesses towards ease of doing business. The reform momentum shall continue," she said.
Sitharaman also talked about the government’s efforts to expand nuclear energy production through small modular reactors.
"Nuclear energy will be brought to different parts of the country through small modular reactors to give energy security. MSME guaranteed loans will also be given to those in areas of critical minerals," she added.
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