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Journalism of Courage
The UPA has chosen to devote significant political capital towards making progress on pension reforms. All the senior ministers of the Union cabinet supported the reforms at the meeting of chief ministers and cabinet ministers on Monday. At this meeting it also became clear that almost all the political parties in the country support the New Pension System. This is reminiscent of other key areas of reform, such as the writing into law of the Fiscal Responsibility and Budget Management Act in 2003, which was made possible by bipartisan consensus.
Nineteen states in the country have come on board pension reform, with some others waiting in the wings. This means, barring the Left parties and the three states ruled by Left governments, a valuable consensus has emerged on pension reform in the country. But here’s where we come across a huge contradiction. The 19 states which want the new system represent the vast majority in Parliament, but they find themselves held to ransom by a minority occupying some 60-odd seats in the Lok Sabha. The Left parties need to perceive the issue from this perspective. It helps neither them, nor the country, if they choose to use their political clout with the UPA and play spoilers on this crucial issue.
The UPA government, now that it has conclusively banished any lingering doubts over the New Pension System, should work towards mainstreaming it. Passing the Pension Fund Regulatory Development Authority Bill is of course the first task, and the Union finance minister underlined its urgency at the recent meeting. But this should be followed rapidly by the process of building IT systems and by catching up with the enormous backlog of employees recruited after January 2004. New recruits at all levels of government need to get their unique identification number; their accounts need to be set up properly and linked to all payroll deductions of the past and future; they need to regularly get their account balance statements. The system needs to have at least two fund managers and at least two investment choices, so as to set the stage for competition in the New Pension Scheme. If this administrative challenge is not addressed with the seriousness it merits, it may prove to be a big setback to pension reform in the country.
