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holiday. Such credits are available because of the mechanism of insurance. The
creditor ensures that there is a provision for insurance in case of any unforeseen
thing happening to the debtor. Life insurance, fire insurance, transit insurance, theft
insurance, insurance against the risk of earthquake and flood are only some of the
basic forms which have made the development of economy possible.
The application of the idea of insurance has gone much beyond the tangible assets,
of which we have talked so long. There are intangible assets like the voice of a
singer, the skill of a surgeon, the finger of a sitarist, the toe of a dancer, the fidelity of
a messenger which are the essential requirements for their importance. There is a
provision to insure each one of the above intangible assets.
The modern knowledge based economy i.e the information technology has not much
in terms of physical asset to exhibit. But it is the most thriving economy. The venture
capitalists do take a lot of risk, but they do work on the principle of insurance, i.e.
calamity will strike a few and others unaffected would compensate.
At a macro level, insurance provides long term capital for investment in the
development of economic infrastructure. The basic reason which prompted the
Indian Government to nationalize the life insurance business in 1956, was to provide
long-term capital to finance the Five year plans. Even today, when the government
has opened the economy to multiple players in the field of insurance, the objective is
to get a lot of long-term investment to build roads, generate power, transport and
other infrastructural facilities for the fast growth of the economy.
Life Insurance Corporation of India alone as on 31.3.2000 has invested almost 1.5
lakh crores of rupees in the furtherance of the Indian economy. More than half of it
has gone directly to be invested in state and central Government securities and the
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