‘The basic mandate of the Project,’ says Maneka Gandhi, the Minister of State for Social Justice and Empowerment, ‘is to make concrete recommendations for actions which the Government of India can take today, so that every young person can genuinely build up a stock of wealth through his or her working life, which would serve as a shield against poverty in old age.’ Laudable indeed! She also manifest her concern for the elderly: "The least noticed of the destitute in India are the elderly. Millions of elderly in India are trapped in misery through a combination of low income and poor health." "The fact that 1999 is being observed as the International Year of Older Persons has enhanced the topicality of the Project OASIS," she eloquently argues!

DAVE COMMITTEE

One would have expected Maneka Gandhi to go about doing something great with the poverty alleviation programmes directed at the aged, for whom she has expressed profuse concern. But alas, her concern ends with constituting an Expert Committee headed by Dr S A Dave, a former Chairman of the Unit Trust of India.

The Committee has segregated its ‘research and recommendations’ into two phases.

The first phase aimed to cover existing mechanisms for social security - Provident Fund, Pension Schemes and Public Provident Funds. The Second Phase would cover other issues including a new voluntary pension scheme, Regulatory Authority for the Pension Fund Industry, etc.

The Phase I report, datelined 1st Feb 1999 was presented to the Minister for Finance, Yashwant Sinha on 17th Feb. In her introduction to the Report, Maneka Gandhi notes that it "recommends: (a) limit early withdrawals, (b)deploy superior financial portfolio management and information systems, so as to obtain high rates of return, (c) expand the coverage of existing provident fund systems so as to reach more workers, and (d) improve the customer service of the existing provident fund systems."

WITHOUT JURISDICTION

The above aspects covered by the Phase I report are obviously subjects falling within the jurisdiction of the Ministry of Labour. The Employees Provident Fund (EPF) and the Employees Pension Scheme (EPS) are administered by a Central Board of Trustees, which is a tripartite body—an autonomous one, at least for the record. Why is it that the Ministry of Social Justice and Empowerment has been allowed to brazenly trespass into a territory that does not belong to it?

The Phase I report has also notified that the Phase II would focus, among others, on non-contributory Govt pensions (Central and State Govts), railways, armed forces as well as P&T). This again means further trangressions into HRD and other ministries.

The BJP coalition has no qualms of infringing the time honoured jurisdictional divisions in the governmental set up. It is for our Parliamentarians to ponder whether such exercises are in conformity with constitutional provisions!

Yet another disturbing aspect of the ‘OASIS’ venture is that the Chief Provident Fund Commissioner, R S Kaushik, is a member of the expert committee and a party to the Phase I Report. He has abdicated his responsibility to safeguard the authority and jurisdication of the EPF Organisation.

RETROGRADE RECOMMENDATIONS

Let us now have a look at the observations/ recommendations of the Dave Committee report.

i) Contribution rates to PF, pension and other social security systems are already quite high. There is no need to step them up further.

ii) Premature withdrawals should only be permitted in the event of permanent disability, death or for specific purposes relevant for old age income security (e.g. housing).

iii) Premature withdrawal (before age 60) should attract a flat 10% withdrawal tax, deductible at source.

iv) PF withdrawal should also be taxed at the rate of 10% after retirement over and above an initial exemption of Rs 1 lakh.

v) Fresh PF accretions, as well as earnings from investment of existing funds should be managed by professional, competent fund managers registered with the Securities and Exchange Board of India (SEBI).

vi) Initially, investment guidelines should be modified to allow investment of upto 20% of the funds into investment grade corporate debt and upto 10% in domestic equity.

vii) The presently limited, assured returns should be replaced by market-determined rates of return.

viii) The Government contribution of 1.16% towards pension accruals should be gradually withdrawn over a period of three years. In the interim, the contribution should be credited to a National Senior Citizen’s Fund. (This Fund is to be set up under the Ministry of Social Justice and Empowerment with a view to encourage, catalyse and complement all private sector efforts to betterment of life of senior citizens.)

ix) The vesting period for pension should be 10 years.

The retrograde, anti-labour and private sector friendly nature of these recommendations are too obvious for any one to see.

The report has made some positive recommendations as well. They are:

a) The existing restriction limiting PF contributions to 177 industries/class of establishments be abolished. All establishments be covered by PF.

b) The minimum number of employees in an establishment (for PF coverage) to be lowered from 20 to 10 and eventually to 5.

c) The wage ceiling of Rs 5000 be abolished.

d) The present tax on earnings (PF interest) over 12% should be abolished.

REJECT IT OUTRIGHT

But these are mere sops. The main thrust of the Dave Committee report is to restrict withdrawals, eliminate govt subsidies and handover the PF and Pension Funds - hard earned savings of the workers to private plunderers and stock market speculators to quench their greed.

The Dave Committee ironically term their exercise as one of ‘empowering’ these funds and their members. It only seeks to ‘empower’ the Ministry of Social Justice to poke its ugly nose into the workers’ funds. It aims at replacing the existing tripartite arrangements for monitoring and administering PF and Pension funds with the so called ‘professional fund managers’ registered with SEBI, which is nothing but an euphemism for the stock brokers—the bulls and bears.