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Resource centre on India's rural distress
 
 

BJP offers hand on pension bill

-The Telegraph

 

The Centre has reached an agreement with the BJP to pass a bill on pension reforms in the next “two or three” days, according to a cabinet minister.

It has also been working on UPA partner Trinamul Congress, which is opposed to the bill.

The BJP agreed after the government gave in on two of its demands related to the legislation, the Pension Fund Regulatory and Development Authority Bill, 2011.

One was that the proposed 26 per cent foreign investment cap in the pension sector will be incorporated in the bill and not in the rules. This is to ensure that if the government wants to increase the limit later, it will have to be done through an amendment in Parliament, not merely by issuing an executive order.

The second was that the bill should have a provision for “sovereign” (government) guarantee on minimum assured returns. The original bill provided for only market-based yields.

The understanding with the BJP was reached at a meeting this morning between finance minister Pranab Mukherjee and L.K. Advani, Sushma Swaraj, Arun Jaitley and Yashwant Sinha. “It was in line with the formula we had asked for,” a BJP source said.

The BJP hopes its “gesture” might deflect some of the criticism it has faced from industry for thwarting the proposal for FDI in multi-brand retail, sources said.

With Trinamul leaders, there was no separate meeting but parliamentary affairs minister P.K. Bansal handed Sudip Bandyopadhyay a note in Parliament containing three amendments to the bill. “I hope these amendments will address the concerns of your leader (Mamata Banerjee),” Bansal was learnt to have told Trinamul’s parliamentary party leader.

While two of the amendments related to the FDI cap and the assured returns — something Mamata had been insisting on — the third allows a subscriber to withdraw money from his account.

Subscribers will be offered a basket of options based on the principle of “high risk, high returns, low risk, low returns”. The choices include shares, mutual funds, debentures and risk-free government securities. A subscriber’s entire kitty can be invested in risk-free government securities. Alternatively, it can be parked in shares and private bonds.

Another senior Trinamul leader said the amendments had been sent to Mamata and while they addressed the party’s concerns, political compulsions might compel it to oppose the legislation as the Left, Trinamul’s main rival, opposes the pension reforms.

At the same time, the Trinamul leaders hope Mamata will not put her foot down on the bill and will allow the government to pass it with BJP’s help, unlike the hard stance she taken against FDI in retail.

“Even if Trinamul walks out, the government can see the bill through with the BJP’s help. Then we cannot be blamed for supporting it,” a Trinamul MP said.

The BJP’s support will be especially crucial in the Rajya Sabha where the UPA does not have the numbers.

The government didn’t appear to have reached out to the Left, though. CPI MP Gurudas Dasgupta said: “Neither the government nor the BJP spoke to us. We are opposed to FDI and any flexible pension scheme.”