Car Insurance and the Budget 2014.

The Indian economy is one of the fastest growing economies in the world, and it is constantly evolving. In May 2014, the election of a new government raised the hopes and expectations of the large population. They expected numerous changes to be implemented, especially with regard to the fiscal policies of the new government. In July 2014, the finance minister, Arun Jaitley, introduced the proposed budget for the year. The changes he made will have an effect on numerous industries, one of which is the automobile industry. The Budget will not only affect the price of cars, but also the price of car insurance.

In India today, many people are earning more money than they were earlier, and are able to afford a higher standard of living. This means that not only are there more cars on the road, there are also a lot of expensive and high-end cars on the road. Unfortunately, the roads in most cities in India are far from perfect, and road rage is not uncommon. This generally leads to cars being bumped and scratched more often than anybody would like. Getting your car fixed is always costly, but luckily it has been made compulsory for all vehicle owners in India to have insurance on their automobiles. While this means that people who buy cars might have to shell out a little extra money for the insurance policy, it is beneficial in the long run, as most insurance policies also take care of damage caused by natural calamities like floods and earthquakes.

The Union Budget 2014 has addressed a large number of issues, some of which are related to the motor industry. The Finance Minister announced that steel prices would be reduced, and the custom duties levied on auto parts would be discontinued. This of course works in favour of the car sector, as the parts used to assemble cars will be available at a lower cost. This straight away means that car prices will probably not see a rise in the coming year. As motor insurance depends on the cost of the car getting insured, it is very likely that the cost of insurance will also remain static in the coming year.

Apart from the policies that directly affect the cost of cars, the Budget has also addressed the issue of insurance in general. The Budget has proposed to increase the Foreign Direct Investments into India to 49%. This was done in the hope that the insurance sector would be easily exposed to international players who operate in large global markets. While this does not necessarily mean that the price of auto insurance will decrease, it does mean that it will not become more expensive.

The changes that have been made so far by the government have all been advantageous to the automobile sector. However, it is important to remember that the Union Budget will only last for another 6 months, and a new Budget will have to be put in place after that. While we hope that the Government continues to take positive steps to help development, it is left to be seen whether the rates of car insurance in India will increase or decrease eventually.

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