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`Uniform tax rates for pvt, public insurers'

Our Bureau

NEW DELHI, Nov. 22

THE Government will ensure a level-playing field between private and public sector insurance companies on taxes, the Finance Minister, Mr Yashwant Sinha, said here.

Addressing the Fifth Insurance Summit organised by the Confederation of Indian Industries (CII), Mr Sinha said the Government was awaiting the report of the committee set up to review the taxation issues in the life insurance sector.

``We want a level-playing field for the private and public sector companies. Whatever rates are decided will be applicable to all of them,'' the Finance Minister said.

Mr Sinha hoped that in the days to come, India would emerge as an important insurance destination worldwide, especially in the area of reinsurance. ``India can become a hub of reinsurance in this part of the world and a major centre in world insurance,'' he said.

The Finance Minister said the opening up of the insurance sector would provide a major push to the overall economic growth. One of the fallouts was expected to be a larger flow of funds into the capital market.

``The flow of funds is expected to add the necessary depth to the capital and spread of the capital market,'' he said, pointing out that one reason for the thin capital market was the absence of funds from the insurance companies and pension funds.

Pointing out that the entry of private insurance players in the market was a win-win situation for all, Mr Sinha said that while the country's infrastructure sector was expected to receive a boost with long-term insurance funds flowing in, there would al so be a major generation of fresh employment.

He said the healthy growth rate registered by the Life Insurance Corporation (LIC) in the rural areas went to prove that there was a large untapped market. ``The popular perception that rural areas are not profitable is erroneous,'' Mr Sinha said.

He said that if the entire potential for new business in insurance was unleashed, the ratio of insurance to GDP can easily rise from the existing two per cent to between 5-10 per cent.

The Finance Minister said the opening up of the insurance sector was in no way an adverse comment on the public sector players. ``They have been doing a splendid job. However, this can be bettered.''

He said the public sector companies would be accorded greater autonomy in future to make them completely board-run entities.

Pic.: The Finance Minister, Mr Yashwant Sinha, greeting Ms Colette Mathur of the World Economic Forum, at the fifth insurance summit in the Capital on Wednesday. Also in the picture are (from left) Mr Anuroop Singh, Managing Director, Max New Yark Life I nsurance Co Ltd, Mr Deepak M. Satwalekar, Managing Director, HDFC-Standard Life Insurance, Mr Arun Bharatram, President, CII, and Mr Stuart Purdy, Chief Representative Manager, CGU Life Insurance.

Picture by Kamal Narang