Centre not worry about Left pension protest

JYOTI MALHOTRA

New Delhi, May 21, 2007 : The Centre doesn’t seem overly concerned with the protestations by the Left parties over the Pension Fund Regulatory and Development Authority (PFRDA) Bill, and is prepared to ride out the storm generated by a letter written by the major Left leaders to Prime Minister Manmohan Singh over this move.

Left leaders like Prakash Karat (CPM), A B Bardhan (CPI), Abani Roy (RSP) and Debabrata Biswas (Forward Bloc), had written to the Prime Minister, almost as soon as Parliament was adjourned sine die late last week, saying that they would oppose the government’s order on setting up such a pension authority.

In fact, there seems to be an unspoken agreement between the Centre and the Left parties on this issue, to the effect that the Bill would not be brought before Parliament, but come into effect through an order issued by the government.

Left leaders seem to have told the Centre that if the Bill is brought before Parliament, they would have ``no option’’ but to oppose it strongly. On the other hand, if the Centre were to issue an order, it could go ahead with the move, despite outward protest by Left leaders, government sources said.

In response to media reports on the Left protest to the government, the Finance ministry clarified today that it had decided to restrict the management of the new pension fund system to public sector entities, while keep foreign and domestic private companies would be kept out.

However, the finance ministry also said that ``direct or indirect foreign investment in the pension fund manager, if any, shall not exceed 26 per cent of its paid up share capital. This is in accordance with the report of the standing committee on finance which examined the PFRDA Bill, 2005. ''

At the outset the Left parties were totally opposed to the pension Bill. The turnaround came when West Bengal chief minister Buddhadev Bhattacharya wrote to his party high command some months ago and asked them to rethink their position on the bill.

The chief minister argued that the bill would significantly reduce the financial burden for the state. The CPM was left with little choice but to climb down from its ``non-negotiable position’’ to one where it was ``willing to negotiate’’ the Bill with the government.

But the CPM had not reckoned with the Left trade unions, both Citu and Aituc, who teamed up and insisted that the Bill, in its very essence, was unacceptable. The Left parties knew that if it came to the crunch, they would not be able to support the Bill on the floor of the house.

Meanwhile, the Finance ministry has said that the deadline for expressions of interest for the appointment of pension fund managers for the new pension system is May 25. Only government entities like central government companies, public financial institutions, etc. in which not less than 51 per cent paid up capital is held by central government, or partly by central government and partly by one or more state governments, can apply.

According to the statement, the selected public sector entity would be required to incorporate the pension fund manager as a separate public sector company. Both the sponsor as well as the pension fund manager would, therefore, be in the public sector.

Further, to be eligible, the sponsors must have at least five years experience of fund management and average assets under management of the sponsors must not be less than Rs. 10,000 crores for the month of March 2007. ``Thus, even amongst public sector entities, only those with sufficient experience and financial strength can apply,'' according to the ministry.

ENDS