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India's insurance sector is expected to be the fastest-growing market among G20 nations over the next five years (2024-2028), according to the Economic Survey 2024-25 presented in Parliament on Friday.
The survey highlighted the sector's strong performance and its growing role in India's financial system. It said "India's insurance sector is performing well and is projected to become the fastest-growing market among G20 nations over the next five years (2024-2028)". The survey highlighted that the rapid expansion of the insurance market is driven by strong economic fundamentals, increasing corporate earnings, and rising institutional investments. Additionally, the sector has benefited from growing inflows from Systematic Investment Plans (SIPs), higher financial formalisation, digitisation, and improved accessibility. These factors have strengthened the insurance market, making it a key contributor to India's financial sector growth. Alongside the insurance industry, the pension sector is also expected to grow significantly as India moves from a lower-middle-income to an upper-middle-income country. As income levels rise, more people are likely to invest in pension plans, ensuring long-term financial security. This transition will further deepen India's financial sector and encourage more savings and investments. It added "The pension sector is expected to grow as the economy transitions from a lower-middle-income to an upper middle-income country". The Economic Survey emphasized the need for balancing financial sector development with financialisation as India works towards its economic vision for 2047. It stated that the country must consider household financial savings, investment needs, and levels of financial literacy while designing policies for the financial sector. Ensuring that incentives in the sector align with India's long-term economic goals is essential for sustainable growth. It said "As India strives to align its financial system with its economic aspirations for 2047, she should strive to maintain the fine balance between financial sector development and growth on the one hand and financialisation on the other. With favourable economic conditions, increasing financial awareness, and supportive government policies, India's insurance and pension sectors are set to expand rapidly in the coming years. However, careful planning and policy measures will be crucial to maintaining this growth while ensuring financial stability and inclusion. (ANI)
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