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February 28, 2001                                       Feedback  

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Budget Impact on Insurance sector neutral

  • Premium paid to all insurance companies that have been approved by the Insurance Regulatory and Development Authority will also be eligible for deduction under section 88.

  • Taxpayers having income less than Rs 100,000 will be eligible for rebate up to 30% under section 88. This would encourage more investment by small taxpayers in insurance policies.
  • Taking into consideration the huge success of the Kisan Credit cards (KCC) the Finance Minister has asked banks to provide insurance cover to the KCC holders within the next 3 years. The cardholder should be covered against accidental death or disability up to a maximum amount of Rs 50,000 and Rs 25,000 respectively. The insurance premium has to be borne by the card issuing authority.

  • A new scheme has been introduced viz, "Ashraya Bima Yojana" with the objective of providing compensation up to 30 % of last drawn annual pay for a period of one year to retrenched workers. Under this scheme, it has been proposed to cover all employees drawing salary up to Rs 10,000 per month. Complete details of this scheme are to be announced by Jun 01 by four Government owned general insurance companies that will administer the scheme on "No Profit No Loss" basis.

  • Two schemes, to be administered by Life Insurance Corporation of India have been proposed to benefit the poorest section of society.

1."Khetihar Mazdoor Bima Yojana":

This will offer the benefits of insurance cover as available under "Jayshree Bima Yojana" declared in last budget and will also provide a pension of Rs 100 to the beneficiary after his attaining 65 years of age.

2. Shiksha Sahyog Yojana

Under this scheme, subscribers to "Jayshree Bima Yojana" will be given an educational allowance of Rs. 100 per month to meet the expenses of education of the children from 9th to 12th standard.

  • Insurance Regulatory Authority has been asked to examine the needs & methods of providing adequate social security to the unorganised sector and offer its recommendations by 01/08/01.