Budget 2024-25: Varun Dua lauds strong economic indicators, stress on fiscal discipline

Union Budget 2024-25: Varun Dua, a prominent figure in the insurance sector and CEO of Acko General Insurance, praised the Indian government's Budget 2024 for its strong economic indicators and its potential to attract foreign capital. Dua, speaking from London, highlighted the budget’s commitment to maintaining fiscal discipline and the positive implications for both foreign and domestic investment.

Economic growth without debt increase

Dua commended the government's ability to target a growth rate of 7-8 per cent without resorting to printing money or significantly increasing debt. "It's a huge tightrope walk, but I think we're getting it right," Dua said. He stressed that such fiscal responsibility lowers the country risk factor, making India a more attractive destination for foreign capital. This reduction in perceived risk can ease the flow of capital to companies like Acko and the broader ecosystem.

Insurance sector concerns

However, Dua pointed out a specific concern from the insurance industry's perspective. He noted that Indian citizens are still burdened with high taxes on insurance products, which he referred to as "syntax." This, he argued, places undue financial stress on citizens in the event of mishaps and does not align with global best practices.

"Globally, insurance companies are the largest suppliers of some form of capital to the government through investments in government projects and securities," Dua explained. He suggested that reducing these taxes could benefit both the citizens and the government, as it would potentially increase the capital available for government projects.

Positive market reactions and future prospects

Dua also discussed the potential positive market reactions to the budget. He mentioned that solid country indicators would likely lead to an upgrade in bond ratings by rating agencies, resulting in a natural inflow of capital at a reduced cost. "I can very shortly see the ratings agencies going for an upgrade on the bond ratings," he said, noting the government's adherence to macroeconomic stability as a commendable move.

Dua admired the political courage demonstrated by Prime Minister Narendra Modi, who has remained focused on long-term goals rather than short-term election gains. "The Prime Minister is saying to the country, 'I am unmoved by the numbers of the election. I've got target 2030, not target 2024,'" Dua noted, highlighting the government's commitment to long-term economic stability and growth.