Insurance for all by 2047: GST reform as the big push India needed
For decades, India’s insurance journey has been constrained by three familiar barriers: low penetration, affordability, and awareness.
- Sep 11, 2025,
- Updated Sep 11, 2025 4:22 PM IST
As India advances into Amrit Kaal, the countdown to 2047 is more than a centenary milestone. It is a reminder of unfinished promises of financial security, inclusive growth, and resilience against life’s uncertainties. Among these, the vision of “Insurance for All” holds unique significance.
Insurance is not just a financial product; it is the foundation of a nation where every family has protection against unforeseen shocks.
For decades, however, India’s insurance journey has been constrained by three familiar barriers: low penetration, affordability, and awareness. That is why the government’s bold move to remove Goods and Services Tax (GST) on insurance premiums, announced on September 3, 2025, marks more than a fiscal tweak. By reducing GST on individual health and life insurance policies from 18% to 0% effective September 22, 2025, India has reframed insurance as a social good rather than a luxury.
This reform could well be the catalytic push we needed to achieve “Insurance for All” by 2047.
The Insurance Gap We Must Close
Despite being one of the fastest-growing major economies, India’s insurance coverage lags global peers:
● Life Insurance Penetration: 3.2% of GDP, compared to the global average of 3.8–4%.
● Non-Life Penetration: Around 1% of GDP, against over 6% globally.
● Awareness: A large section of households still view insurance primarily as a tax-saving tool, not a financial shield.
Affordability has been a key barrier. A premium of ₹30,000 ballooned to ₹35,400 with GST, making many families hesitate at the point of purchase. The zero-GST reform removes this friction, saving policyholders thousands of rupees a year, enough to fund an annual health check-up or critical medicines. For seniors and first-time buyers in semi-urban India, this is a game-changing relief.
More Than Tax Relief: A Strategic Reset
The implications go far beyond cheaper policies:
1. Affordability & Access: Insurance becomes easier to buy, encouraging penetration in lower- and middle-income segments.
2. Trust & Mindset Shift: Citizens see insurance as a public priority, not a private burden.
3. Market Growth: Wider adoption expands risk pools, allowing insurers to price more sustainably.
4. Complement to Welfare Schemes: A tax-friendly environment strengthens public-private synergy with programs like Ayushman Bharat.
Much like Aadhaar enabled financial inclusion at scale, zero GST could create the enabling ecosystem for universal protection.
Why This Matters for India’s Development
Insurance is no longer a sectoral concern, it is a development imperative that cuts across national priorities:
● Healthcare Security: With medical inflation at 12–15% annually, families without health cover face the risk of financial ruin. Insurance with zero GST helps prevent medical emergencies from becoming debt traps.
● Financial Inclusion: Just as Jan Dhan Yojana expanded banking access, insurance reforms can expand protection, ensuring resilience against crises.
● Fiscal Stability: A deeper insurance base distributes risk more widely, reducing the government’s fiscal burden during disasters or pandemics.
● Retirement Readiness: As India ages, pension and annuity products will be crucial. Rationalized taxation makes these solutions more attractive.
The Road to 2047: From Reform to Reality
By 2047, “Insurance for All” must become more than rhetoric. The GST reform is the springboard, but execution will demand collective effort from insurers, regulators, and households. The path ahead could include:
1. Universal Health Insurance: Every household covered, preventing health shocks from turning into financial crises.
2. Life & Pension Security: Affordable, long-term products ensuring dignity in retirement, especially for unorganized workers.
3. Micro-Insurance for Vulnerable Groups: Simple, ultra-low-cost covers for farmers, small traders, and gig economy workers.
4. Digital-First Distribution: Leveraging Aadhaar, UPI, and DigiLocker to make purchase and servicing seamless.
5. Financial Literacy at Scale: Campaigns that reposition insurance as essential protection, not just a tax-saving tool.
Conclusion: The Big Push We Needed
India’s progress has often hinged on decisive policy shifts, the Green Revolution secured food sufficiency, Aadhaar transformed financial inclusion. Today, GST reform on insurance premiums has the potential to be that transformative moment for financial protection.
Insurance for All by 2047 is not merely about increasing penetration statistics. It is about dignity, security, and resilience for every Indian household. By lowering the cost of protection, the government has made insurance affordable, accessible, and aspirational.
A well-insured India will not only be prosperous but also secure, ready to face its centenary of independence with confidence and care.
(Views are personal; the author is Joint Chairman & MD, BajajCapital)
As India advances into Amrit Kaal, the countdown to 2047 is more than a centenary milestone. It is a reminder of unfinished promises of financial security, inclusive growth, and resilience against life’s uncertainties. Among these, the vision of “Insurance for All” holds unique significance.
Insurance is not just a financial product; it is the foundation of a nation where every family has protection against unforeseen shocks.
For decades, however, India’s insurance journey has been constrained by three familiar barriers: low penetration, affordability, and awareness. That is why the government’s bold move to remove Goods and Services Tax (GST) on insurance premiums, announced on September 3, 2025, marks more than a fiscal tweak. By reducing GST on individual health and life insurance policies from 18% to 0% effective September 22, 2025, India has reframed insurance as a social good rather than a luxury.
This reform could well be the catalytic push we needed to achieve “Insurance for All” by 2047.
The Insurance Gap We Must Close
Despite being one of the fastest-growing major economies, India’s insurance coverage lags global peers:
● Life Insurance Penetration: 3.2% of GDP, compared to the global average of 3.8–4%.
● Non-Life Penetration: Around 1% of GDP, against over 6% globally.
● Awareness: A large section of households still view insurance primarily as a tax-saving tool, not a financial shield.
Affordability has been a key barrier. A premium of ₹30,000 ballooned to ₹35,400 with GST, making many families hesitate at the point of purchase. The zero-GST reform removes this friction, saving policyholders thousands of rupees a year, enough to fund an annual health check-up or critical medicines. For seniors and first-time buyers in semi-urban India, this is a game-changing relief.
More Than Tax Relief: A Strategic Reset
The implications go far beyond cheaper policies:
1. Affordability & Access: Insurance becomes easier to buy, encouraging penetration in lower- and middle-income segments.
2. Trust & Mindset Shift: Citizens see insurance as a public priority, not a private burden.
3. Market Growth: Wider adoption expands risk pools, allowing insurers to price more sustainably.
4. Complement to Welfare Schemes: A tax-friendly environment strengthens public-private synergy with programs like Ayushman Bharat.
Much like Aadhaar enabled financial inclusion at scale, zero GST could create the enabling ecosystem for universal protection.
Why This Matters for India’s Development
Insurance is no longer a sectoral concern, it is a development imperative that cuts across national priorities:
● Healthcare Security: With medical inflation at 12–15% annually, families without health cover face the risk of financial ruin. Insurance with zero GST helps prevent medical emergencies from becoming debt traps.
● Financial Inclusion: Just as Jan Dhan Yojana expanded banking access, insurance reforms can expand protection, ensuring resilience against crises.
● Fiscal Stability: A deeper insurance base distributes risk more widely, reducing the government’s fiscal burden during disasters or pandemics.
● Retirement Readiness: As India ages, pension and annuity products will be crucial. Rationalized taxation makes these solutions more attractive.
The Road to 2047: From Reform to Reality
By 2047, “Insurance for All” must become more than rhetoric. The GST reform is the springboard, but execution will demand collective effort from insurers, regulators, and households. The path ahead could include:
1. Universal Health Insurance: Every household covered, preventing health shocks from turning into financial crises.
2. Life & Pension Security: Affordable, long-term products ensuring dignity in retirement, especially for unorganized workers.
3. Micro-Insurance for Vulnerable Groups: Simple, ultra-low-cost covers for farmers, small traders, and gig economy workers.
4. Digital-First Distribution: Leveraging Aadhaar, UPI, and DigiLocker to make purchase and servicing seamless.
5. Financial Literacy at Scale: Campaigns that reposition insurance as essential protection, not just a tax-saving tool.
Conclusion: The Big Push We Needed
India’s progress has often hinged on decisive policy shifts, the Green Revolution secured food sufficiency, Aadhaar transformed financial inclusion. Today, GST reform on insurance premiums has the potential to be that transformative moment for financial protection.
Insurance for All by 2047 is not merely about increasing penetration statistics. It is about dignity, security, and resilience for every Indian household. By lowering the cost of protection, the government has made insurance affordable, accessible, and aspirational.
A well-insured India will not only be prosperous but also secure, ready to face its centenary of independence with confidence and care.
(Views are personal; the author is Joint Chairman & MD, BajajCapital)