Are there any chances that the government will infuse another round of capital for non-life insurers in the upcoming budget?

Budget 2020 is a little more extraordinary and does not really hold space for any wrong decisions on the part of the government. So, the finance minister will do what is more needed and will help the economy to get back on its feet.  It is more likely that the Finance Minister will announce second-round of infusion of capital for public sector general insurance companies to help improve their financial health.

Earlier the government has infused Rs 2,500 crore in the National Insurance, Oriental Insurance, and United India Insurance. However, these companies are not fully revived yet and will require Rs 10,000 – 12,000 crore more to meet the solvency margin. So, there are chances that the government will announce infusion in the latest budget.

It has also been announced that the companies – National Insurance, Oriental Insurance, and United India insurance will soon be merged and the resulting entity shall be the largest non-life insurance company in India, valued at Rs 1.2-1.5 lakh crore.

However, the process of the merger has been delayed due to the poor financial condition of the companies and several other reasons. Therefore it is more likely that the government will infuse more capital so as to revive these companies and get them started with the process of the merger to form the biggest non-life insurer.

There are many predictions in the market about the budget, so we can all just wait for the final budget announcement.