Page 6 - Insurance Times December 2018

Karnataka may start own Only BS VI-compliant vehicles to be sold from 2020

crop insurance scheme The Supreme Court has made it categorical that only BS VI-compliant vehicles
will be sold in India from April 1, 2020. This means
Karnataka Government is proposing
that the current fleet of BS IV cars, two-wheelers and
trucks will be retailed for the next 17 months only.
In reality, factory inventories will begin depleting
from December 2019 as the dealership pipeline gets
ready to be replenished with BS VI vehicles.
Manufacturers were hoping that there would be a grace period to liquidate old
stocks beyond April 2020 but the SC's directive has completely eliminated that
possibility. It will now be a huge challenge for them to plan the phaseout sched-
ule of BS IV vehicles while ushering in the new range.

to start its own crop insurance "It is going to be really tough," admits an auto industry executive. According to
scheme. "There are apprehensions him, market sentiment is already down thanks to rising fuel prices and, in the
that the policy being implemented case of two-wheelers, the added burden of insurance costs. With the country
heading for elections next year, the uncertainty could grow even further.
by the Centre is not beneficial to
farmers as we feel that the param- In this backdrop, he wonders, it remains to be seen if customers will be pre-
eters adopted to assess crop losses pared to cough up money for a BS IV car whose resale value is bound to plum-
are complicated and the claims pro- met in the BS VI era. Manufacturers will typically offer generous discounts to
cess is also delayed," said NH entice buyers at a time when material prices are also going through the roof.
Shivshankar Reddy, Karnataka Agri- The silver lining is that there is no ambiguity about the road ahead. Welcom-
culture Minister. Some of the claims ing the SC order, N Raja, Deputy MD, Toyota Kirloskar Motor, said: "Such clear
for the 2016-17 cropping season es- and amplified directives help develop viable technologies with collaborative
timated at around Rs. 150 crore are efforts to achieve the nation's mission plans and also provide sufficient lead
still pending. time for the auto industry to recalibrate manufacturing towards achieving
"We are examining the scheme smoother transition."
adopted by Bihar and also studying
the financial implications of having GIC Re total income rises to Rs. 12,879.90 crore in Q2
our own crop insurance scheme," GIC Re posted a 63.8 per cent drop in its net profit to Rs. 513.84 crore for the
Reddy said. The state has budgeted second quarter of the fiscal due to higher underwrit-
Rs. 845 crore towards crop insurance ing losses. Its net profit stood at Rs. 1,419.11 crore as
premiums. Bihar had launched its on September 30, 2017, and it had also reported a 98
own crop insurance scheme during per cent rise in net profit for the first quarter of the
the kharif season this year to com- fiscal at Rs. 771.42 crore.
pensate farmers better. GIC Re has also reported a near 29 per cent drop in net profit to Rs. 1,285.27
Karnataka, which is reeling under crore for the first half of the financial year 2018-19 as against a net profit of
drought due to a weak southwest Rs. 1,809.22 crore a year ago. The re-insurer's underwriting losses amounted
monsoon, has pegged the crop to Rs. 2,264.88 crore for the July-September quarter of this fiscal, as compared
losses at Rs. 16,662 crore. The State with a profit of Rs. 703.74 crore in the same quarter a year ago.
has sought assistance to the tune of Its underwriting losses saw a sharp increase across almost all segments includ-
Rs. 2,434 crore from the Centre un- ing motor, aviation, engineering, health and marine cargo. However, its gross
der the National Disaster Relief premiums written rose 15.5 per cent to Rs. 8,325.95 crore for the quarter ended
Fund. September 30, as against Rs. 7,209.61 crore for the same period of 2017-18.
Reddy said crops such as maize, During the reporting quarter, its total income rose to Rs. 12,879.90 crore from
groundnut, jowar and pulses have Rs. 10,714.69 crore a year ago. "Other income includes forex gain of Rs. 164.87
suffered damages on account of the crore for the half year ended September 30, 2018," GIC said. It had a solvency
rain deficit. ratio of 1.73 at the end of the reporting quarter, which is in line with 1.72 a
year ago. It is also well above the minimum required solvency ratio of 1.5 times.

6 The Insurance Times, December 2018