Sunday, Jan 29, 2023

Ferment in Congress over pension reform U-turn; leaders flag ‘lack of consultation’

Congress-led UPA had enacted the PFRDA law with rival BJP support in 2013

The Congress is aggressively advertising the decision of the party-ruled Rajasthan and Chhattisgarh governments to restore the old pension scheme and promises to do so in Himachal and Gujarat if voted to power. (PTI)

The Congress leadership’s decision to do a U-turn on pension reforms and promise restoration of the old pension scheme in Himachal Pradesh and Gujarat is seen as a “populist reversal” without much internal consultation, at least three senior leaders, who were key ministers in the Manmohan Singh cabinet, told The Indian Express.

In what reflects the internal ferment with the party, a former Cabinet minister, who did not wish to be named, said, “What is the forum where such issues are discussed and thrashed out? Such matters never come up before the Congress Working Committee. And I am not aware of any discussion before arriving at this decision.”

Pension reforms initiated in 2003 by the AB Vajpayee-led NDA government were keenly pursued by the Congress-led alliance which came to power after the 2004 Lok Sabha elections. The UPA coalition government under Prime Minister Manmohan Singh took the New Pension System (NPS) to its logical conclusion in 2013 by passing the Pension Fund Regulatory and Development Authority (PFRDA) Bill.

The Bill, which proposed a new pension regulator, was opposed by the Left parties and the Trinamool Congress, but could still be passed following back door discussions with the BJP which showed some reluctance initially. Sources involved in the discussions then said BJP’s Sushma Swaraj had personally met then Finance Minister P Chidambaram to sort out differences on allowing FDI in the pension sector under the PFRDA Act by linking it to the FDI ceiling in the insurance sector.

Subscriber Only Stories
At the end of the Bharat Jodo Yatra
Why BharOS has Indian developers excited and sceptical: ‘More choice is g...
UPSC Essentials | Weekly news express with MCQs: Republic Day, India-Egyp...
As India prepares for centralised power market shift, EU moves a differen...

As the Congress now aggressively advertises the decision of the party-ruled Rajasthan and Chhattisgarh governments to restore the old pension scheme and promises to do so in Himachal and Gujarat if voted to power, many senior members of the then UPA cabinet are disappointed over the “populist reversal” of the alliance’s position. Lack of consultation and this U-turn on reforms has left them frustrated.

“Such decisions need broader consensus. Remember when the NPS was introduced. Most Congress governments including Himachal Pradesh had opted for it. There is a demand from employees but you cannot arbitrarily reverse the process. Those who are running the affairs of the party now should remember it was our government which had taken the NPS to its logical conclusion,” one leader said.

In its 2014 Lok Sabha manifesto, the Congress had actually highlighted the passage of the PFRDA Act listing it among the “landmark legislation” passed between 2009 and 2014. “Mindful that our nation’s citizens, and particularly our senior citizens, deserve greater security with regard to their pension funds, the Congress-led UPA Government enacted the Pension Fund Regulatory and Development Authority Act, 2013, to establish a regulator to ensure these funds are protected from unscrupulous individuals,” it had said.


The Indian Express reached out to AICC General Secretary in-charge of communication Jairam Ramesh, but he did not respond.

The UPA government first introduced the pension Bill in 2005 but it could not be passed, and Jairam Ramesh was a member of the Standing Committee on Finance to which the Bill was referred then. It was introduced again in 2011 and was passed in September 2013. The Bill was piloted by Chidambaram, who had said there is enough structure in place in NPS to manage the funds well and safely and that the returns would be more than government bonds.

Pointing out that no law can be implemented retrospectively, one leader said the employees had contributed to their individual accounts in the NPS and not to the state. “How can it be given back to the states,” he asked. One leader likened the party’s changed position to the division which was seen in the party in 2020 when the government decided not to sign the Regional Comprehensive Economic Partnership (RCEP) agreement.


It was the UPA government which had decided to join the negotiations for RCEP in 2012. But it changed its position in 2019 and asked the Narendra Modi-led NDA government not to sign RCEP stating the economic context had changed. “I don’t know whether Dr Manmohan Singh was spoken to regarding the change in the party’s position,” one leader said.

Addressing a Chief Ministers’ conference on pension reforms in January 2007, Singh had advocated passionately for a complete switch to the new system. Seeking the support of states to allow accumulated funds in the New Pension System to be invested in stock markets and other options such as bonds, and highlighting the rising pension bills taking a toll on other expenditure, Singh had said, “Even in the states, all of you must be faced with the rising cost of pension liabilities which compete for your limited resources. All of you have large expenditure obligations to meet for ensuring the rapid development of your states. Therefore, we need better management of our pension liabilities so that state finances can be managed in a healthy, sustainable way in future.”

“India is on the cusp of its demographic evolution and will miss out on a wonderful opportunity to put in place the social safety nets which an ageing population will soon demand. We should therefore collectively address this important issue, so that we can grasp this opportunity before it becomes an insurmountable problem,” he had said.

One senior leader argued that some of the promises made by the party for the Himachal elections defy logic and economic understanding. “We have promised to purchase cow dung at Rs 2 per kg replicating the Chhattisgarh model. The topography of the two states are completely different. Who will collect cow dung in remote, hilly villages… then there is a promise to give financial assistance of Rs 1500 to all women aged between 18 to 60 years. Have we calculated the budgetary implication of this promise? We are a serious national party which has governed the country for 60 years….to make such promises without thinking it through… I don’t know who makes these decisions,” one leader said.

While the likes of Chidambaram, who had piloted the PFRDA bill, and former Commerce Minister Anand Sharma had been silent, Praveen Chakravarty, the head of the party’s data analytics department, showed conviction to raise questions on the financial viability of restoring the old pension scheme in Gujarat. Chakravarty, who had co-authored several newspaper articles with Singh and Chidambaram, however, was promptly rebuffed by the party.

First published on: 18-11-2022 at 20:55 IST
Next Story

Football-mad Germans turning their backs on World Cup

Latest Comment
Post Comment
Read Comments