Chidambaram’s task cut out: Take Left along on pension reform route

Finance Minister P Chidambaram will soon begin fresh talks with the Left to try and get its support for the Pension Fund Regulatory Development Authority Bill, which is expected to herald imperative pension reforms in the country.

Finance Minister P Chidambaram will soon begin fresh talks with the Left to try and get its support for the Pension Fund Regulatory Development Authority (PFRDA) Bill, which is expected to herald imperative pension reforms in the country. The UPA government has intended to introduce the Bill in Parliament for several sessions now, but has not yet done so due to vehement opposition from Left allies.

Though the UPA is committed to the Bill and can expect the support of the BJP-led Opposition — which kicked off the process of pension reforms during its tenure — to ensure its passage in Parliament, it has taken a cautious approach so far. The UPA had decided to take up the Bill for Cabinet and then parliamentary approval, only after it managed to convince its Left allies on the need for change.

Earlier, discussions with the Left, spearheaded by Chidambaram, had reached a stalemate by December 2005 though the Finance Minister had managed to settle most issues that the Left was concerned about. The Government had already accommodated the Left’s demands for a public sector fund manager in the New Pension Scheme and a 100-per cent Government bonds investment option.

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However, the Left leaders extended their demands further, they now wanted only public sector fund managers in the new pension regime. Not only that, they now wanted the new system to allow no investments other than Government securities. This means that neither private sector fund managers can participate nor can investors benefit from long-term equity investments, defeating one of the key purposes of the reforms process.

The Left leaders, including CPI General Secretary Prakash Karat, had even met the PM for these demands in late 2005. But now with the state Assembly elections over, the Government will make a fresh attempt to push through the PFRDA Bill in the Monsoon session.

A Finance Ministry official told The Indian Express, ‘‘The West Bengal government is very keen to switch over its new employees to the New Pension Scheme and go away from the defined benefits system. With the elections out of the way, it’s possible the Left may be more agreeable to the Bill now.’’