Rejig To Affect Pension Reforms

New Delhi, June 28: | Updated: Jun 29 2002, 05:30am hrs
The impending Cabinet reshuffle may have a bearing on the pace of pension reforms as well, apart from the usual ripples elsewhere.

Whether finance Yashwant Sinha stays or goes will be only a part of the story, averred government sources. Whether he or his successor would be willing to offer an attractive enough package for voluntary contribution in any pension scheme for the unorganised sector would depend on their perception. The current thinking in the ministry favoured this line of action.

Labour minister Sharad Yadav and the minister for social justice and empowerment Satyanarayan Jatiya, however, would also have a say in the matter of introducing such a scheme.

Mr Sinha had promised in his Budget speech that an announcement would be made in this regard by June 30. That deadline is now set to lapse with the group of ministers on pension reforms meeting just once in the last six months. The second meeting called on June 24 was cancelled as both Mr Sinha and Mr Yadav failed to make it to Delhi in time, and then the upcoming Cabinet reshuffle put every other agenda on hold.

More important is the opposition that Mr Yadav has shown in letting any new proposal affect the existing schemes and his ministry’s hold over them. Mr Jatiya has been more forthcoming, emphasising that the deprived sections of society ought to be provided for on a war footing, and that a scheme to address these concerns was imperative.

However, the contentious part would be the adoption of the recommendations of the OASIS report prepared by the S A Dave committee which was commissioned by erstwhile social justice minister of state Maneka Gandhi, or the Insurance and Regulatory and Development Authority (Irda) report mandated by Mr Sinha in his 2001-02 Budget speech. They differ greatly in their approach towards regulation as well as fund management. The sources asserted that the finance ministry’s line of action now seemed to be to let the existing schemes operate and to work out a consensus on at least some policy guidelines in the second GoM meeting. That, however, did not come to pass.

They stressed that the existing social sector schemes afforded a mere pittance in terms of relief, with monthly pension from all the schemes together amounting to Rs 100-1,000.

The greater uncertainty was whether the schemes were being effectively implemented or whether they were porous, with the intended beneficiaries still deprived of the pension.

The sources felt that any proposal ought to aim at alleviating the travails of the vast population of unemployed adults, irrespective of their age profile. The post-reshuffle composition of the GoM may throw some light on the line the government intends to take on the issue.