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Saturday, Mar 02, 2002

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Pension sector under IRDA purview

Hema Ramakrishnan
Shaji Vikraman

NEW DELHI, March 1

THE insurance sector regulator, Insurance Regulatory Development Authority (IRDA), is set to be designated as the new regulator for the pension sector also.

Apart from the proposal to mandate IRDA, the Finance Ministry will also take up for Cabinet approval shortly, modifications to the Fiscal Responsibility and Budget Management Bill as part of the efforts aimed at fiscal consolidation, according to the Finance Minister, MrYashwant Sinha.

In the financial sector, the Unit Trust of India has been told by the Government to come up with suggestions on resolving the conflicting views of two committees on restructuring of the institution. A view will also be taken shortly on the issue of portfolio investment limits for foreign institutional investors (FIIs) in state-owned banks, capped at 20 per cent now.

A day after presenting the Union Budget, Mr Sinha who has come under fire from his predecessors for being clueless on tackling the economic slowdown, told Business Line that he had extended and deepened the process of fiscal consolidation initiated last year.

"Only the Finance Minister of the day will have the complete picture. One cannot have a road-map year after year."

Mr Sinha sounded confident about meeting the revenue collections for the ensuing fiscal on the back of renewed industrial activity.

"Despite the industrial slowdown, the shortfall in tax collections of over Rs 20,000 crore in this fiscal should be viewed from the perspective of the give-aways or tax concessions aggregating Rs 17,000 crore. If that was not given away, the shortfall would have been only to the extent of Rs 4,000 crore or so," he said.

On the pension sector regulatory front, the Government had to make up its mind whether to go by the IRDA report recommendations of having the insurance regulator as the regulator or the earlier OASIS report on old-age security which had suggested an entirely separate regulator for the sector.

Mr Sinha told Business Line that the prevailing view in the Ministry is that the IRDA should regulate this sector.

According to the Budget speech, a decision on this would be taken latest by June 30.On the restructuring of the UTI, the Government wants to take a decision after taking into account the views of the UTI and also the likely recommendations of the Joint Parliamentary Committee (JPC).

"Since there is a difference of opinion on the approach towards the restructuring of the UTI into a professional fund management organisation between two committees, we have told the UTI to come up with suggestions,'' Mr Sinha said.

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