Mumbai: The government can further enhance insurance penetration in the country through compulsory enrolment of MGNREGA workers in PMJJBY and PMSBY, and rationalizing the 18 percent GST on insurance policies, according to an SBI report.

The report recommended that the insurance coverage can also be increased by plugging the protection gap through the introduction of some standardised products for various sectors.

"Though MGNREGA has provided livelihood security, we propose compulsory enrolment of MGNREGA workers in PMJJBY and PMSBY for a payment of only Rs 342 (330+12), which can be bought by the government," SBI Ecowrap said.

As only 10 percent of HHs (households/individuals) complete 100 days of work, the cost of compulsory enrolment is only Rs 400-500 crore which may be borne by the government, the report said.

The insurance penetration in India has increased from 2.71 per cent in FY01 to 5.20 percent in FY09 due to liber alisation but thereafter the lev el of penetration declined and reached 3.30 per cent in FY14.

However, with significant government support and universal insurance schemes (PMJJBY, PMSBY), the in surance penetration has started increasing again from FY15 and is at 4.20 percent in FY21, the report noted.

Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) is available to people in the age group of 18 to 50 years for a premium of Rs 330 per annum. The life cover under the scheme is Rs 2 lakh.

Pradhan Mantri Suraksha Bima Yojana (PMSBY) is available to people in the age group 18 to 70 years. For an annual premium of Rs 12, the risk covered under the scheme is Rs 2 lakh for accidental death and full disability and Rs 1 lakh for partial disability.

The mandate of the MGN REGA (Mahatma Gandhi National Rural Employment Guarantee Act) is to provide at least 100 days of guaranteed wage employment in a financial year to every rural household whose adult members volunteer to do unskilled manual work.

The report further said at present all insurance policies are taxed at GST of 18 per cent, and a reduction in pre mium will go a long way in building a secure nation where every household will have the ability to overcome financial stress caused by unforeseen events of life.

In India the insurance penetration is low and the introduction of tax in the realm of insurance may not represent the best step forward.

"After the Covid-19 pandemic effect on the economy, it seems this is the right time to reduce the GST rate to 5 percent or 'Nil' rate on life/ health/term insurance to cover the maximum population of India," the report said.

In India, the overall protection gap in all the segments (both life & non-life) is about 70 to 80 percent, which means only 20-30 percent have any type of insurance.

Source- PTI