WEEKEND LIGHTER: REVIEW PENSION SYSTEM
WEEKEND LIGHTER: Review Pension System
(A weekly recap of Blog Posts and
responses in the media by
M G Warrier, posted at the weekend @www.warriersblog.com)
July 28, 2017
Section IV: Essence of Karma Yoga
Flash: This Blog crosses 1,11,111 pageviews on August 4/5, 2017
Flash: This Blog crosses 1,11,111 pageviews on August 4/5, 2017
I
COVER STORY
Review Indian
Pension System
Ramanath
Nakhate’s letter captioned “United fight for pension” (Business Standard, July
24) gives deep insight into the plight of a section of pensioners who retired
from some public sector institutions. The reasons for GOI and organizations
like LIC, RBI and PSBs in which pension schemes had been introduced during
1990’s lending a deaf ear to genuine demands for pension revision may be
different from those being shared in public. To understand that, one may have
to first have a look at the present status of pension scheme applicable to
central government employees.
By
an executive order issued in December 2003, GOI successfully divided central
government employees into three classes for the purpose of pension benefits:
(i)
Employees who were in service as on
December 31, 2003, who will continue to enjoy the benefits of ‘Defined Benefit
Pension Scheme’ which was in existence on that day, for life (Assuming the
employee who joined on December 31, 2003 at the age of 25 may retire in 2038
and assuming the person live up to the age of 80, the pension scheme will
remain in force till the year 2058).
(ii)
Defence Personnel: Serving and new
defence personnel (joining after December 31, 2003) will continue to enjoy the
benefit of Defined Benefit Pension Scheme.
(iii)
Central government employees joining
service on or after January 1, 2004 will be covered by a “Defined
Contribution-based pension scheme” called NPS (New Pension Scheme, later
rechristened as ‘National Pension System’) where employees’ contribution of 10
per cent of salary will be augmented with a matching contribution of 10 percent
by the employer. NPS differs from the old Contributory Provident Fund only in
regard to certain details in regard to provisions relating to investment/fund
management/withdrawal.
The
reason given for introduction of NPS was
rising pension liabilities. The pension liability may start tapering only after
a few more decades. All these call for a comprehensive review of the Indian
Pension System to make it capable of ensuring reasonable retirement benefits to
all who are in regular employment. NPS is no substitute for the pension scheme
it has replaced. Pensioners’ demand for periodic upward revision factoring in
the changes in costs and living conditions is genuine.
M G Warrier,
Mumbai
II
Recent
responses
IBC, Reinventing the wheel?
This refers to
Somasekhar Sundaresan’s article “Last resort shouldn’t turn into first choice”
(Business Standard, Without Contempt, July 27). Closely following filing of a
petition in the Gujarat High Court by Essar opposing insolvency proceedings
initiated by banks, media and analysts became more liberal in expressing views
that were not much supportive of the current efforts of GOI and RBI to use the
new instrument of Insolvency and Bankruptcy Code to handle Banking System’s
stressed assets.
Let us not
forget that NCLT was not conceived as a magic solution for NPAs, but was meant
to strengthen the existing mechanisms to supervise and monitor banking
business. All the existing arrangements including appraisal of prospective
borrowers, online monitoring of projects financed and efforts for timely
recovery will, hopefully, continue with more vigour and professionalism.
RBI is
participating in the ‘Insolvency Resolution’ process, not by choice. Media
converted Gujarat High Court’s observation that ‘those with professional
degrees may not necessarily be competent to run companies’. That could have
been skipped as an ‘innocent oversight’(to borrow a phrase from RBI deputy
governor S S Mundra) in expressing their Lordship’s views, as, when you point
an accusing finger to an unspecified target, all other fingers go in the
opposite direction!
Indian financial
sector is going through a transition and as the responsibility of other sectors
for the chaotic situation gets identified and fixed, the health of Indian
Economy will be restored and economic growth will not remain just a jugglery of
numbers. If banking system has ‘stressed assets’ of a level higher than the
tolerance limits, there are individuals and corporates who have gained in the
bargain, who are making a last effort to get away by maligning the regulator
and supervisor of banks. This time around, ‘WE THE PEOPLE’ are more vigilant
and are watching the game closely.
M G Warrier, Mumbai
“Rest” and trust
Reserve Bank of
India (RBI), through a circular dated July 27, 2017 has raised the ‘rest’
period for statutory central auditors(SCAs) of banks to 6 years”. The grounds
for longer rest period for SCAs given in the RBI circular more than justifies
the enhancement of rest period for SCAs
from two years prevailing since 2001 to six years. They are also suggestive of
unethical practices being followed by professionals and banks in tandem.
Let us concede
that regulatory oversight alone cannot ensure best practices of governance in
organizations which manage huge resources including public funds. And
diminishing public trust in professionals is a matter for worry not only for
the government or regulators, but for the common man and the taxpayer. In the
given case, even the possibility of lateral movement of individuals from one CA
firm to another can reduce the impact of forced ‘rest’ periods. It is difficult
to build trust and honest behavior through statutes or directions.
In this context,
the only option left is strict self-regulation by professional bodies. The
institute of CAs, RBI and banks should expose unethical approaches by
individual CA firms and their employees and where proved guilty the
firms/individuals should be punished. If there are legal hurdles, GOI need to
come to help them out.
M G Warrier, Mumbai
RBI’s
vision
RBI Deputy
Governor Viral Acharya’s observation that “NPAs take precedence over rate cut”,
on the sidelines of the Delhi Economists Conclave last weekend confirms that
there is continuity and consistency in the thought process of India’s central
bank. It is comforting to see that RBI’s priorities remain undisturbed despite
frequent changes at the helm.
Recent years
have seen RBI getting the necessary policy support from GOI in performing its
mandated roles efficiently. We need to see the evolution of MPC (including the
recent guidance to members of MPC on secrecy issues) and the deft handling of
issues relating to management of banking system’s stressed assets as clear
evidence of a change for the better in the GOI-RBI engagement.
While pressure
will continue for rate cuts and other measures to make credit cheaper, so long
as RBI is able to explain the rationale for its policy stances, hopefully,
there will not be threats of ‘walking alone’ by the finance minister or a need
for the RBI governor to opt to fall sick. This is the comfort one feels from
the body language of Arun Jaitley which accommodates professionalism in public
sector organizations.
With his refusal
to sugar-coat or camouflage his clarity of perception to make others happy, Dr
Acharya, who has RBI’s priorities rightly set in his mind, promises to make
good what RBI lost by the return of Dr Raghuram Rajan to academia.
M G Warrier, Mumbai
III
Select
links:
IV
Leisure,
Faith
Essence of Karma Yoga*
A
major section of Gita teaching deals with the dual role of an individual that
makes him responsible to his duties to the world around him as well as to those
he owes himself. Krishna explains that the path of action or karma when
followed in the right spirit can lead one directly to salvation and that for a
majority, it is more suitable than jnana, bhakti or yoga.
In
a discourse, Sri Jamadagni drew attention to how Krishna brings out the subtle
and delicate issues that are likely to arise in fulfilling one’s social and
individual commitments.
Each
one with the immortal self within the perishable body has to follow his
swadharma, an internal subtle law governing him and the universe. Our action
has to be the result of our nature. Often, one is caught in the grip of
prevalent ideas at a particular point of time and the forces of tradition as
well.
Arjuna
typifies this confused state when he wishes to abandon the battle to seek
solace in retreat from the world. He does not want to fight his own kith and
kin, and is obviously being overruled by conscience and inner instinct. Krishna
exhorts each one to understand that an individual is a part of the entire
universe and is responsible for its upkeep; at the same time, he cannot ignore
his own spiritual destiny, to get liberated through sadana. Each one has to
figure out what is action, or inaction and wrong action and should never give
up one’s duties on any ground. Arjuna as a Kshatriya warrior is bound by his
karma to fight for the upkeep of dharma.
Doing
one’s duty as an ordained commitment and offering the act and its fruits to the
Lord is the essence of karma yoga and it leads one to the same end that a yogi
or a sanyasi or a bhakta achieves.
*Source:The
Hindu, Faith column
WB: 3002
WB: 3002
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