Role on Insurance Sector in Indian Economy

Abstract

Insurance market contributes to the economic growth as a financial intermediary and also helps in managing risk more effectively. This piece of research work made an attempt to examine the relationship between insurance and economic growth in India considering the state level data and contributing to the existing literature. Financial sectors of a country are considered as a vital part of its economic growth. An effective and well developed financial system helps to increase productivity and subsequently the economic growth. Insurance is an important part in the financial sector that contributes significantly to the economy of a country. Insurance market contributes to the economic growth as an financial intermediary and also helps in managing risk more effectively. The economy of India is the eleventh largest in the world by nominal GDP and the fourth largest by Purchasing Power Parity (PPP). Insurance contribution materially to economic growth by improving the investment climate and promoting a more efficient mix of activities then would be undertaken, in the absence of risk management instrument. Insurance sector in India is one of the most booming sectors of the economy and is growing at the rate of 15-20 percent per annum. In India, insurance is a flourishing industry, with several national and international players competing with each other’s and growing at rapid rates.