• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Sarbajeet K. Sen

"The initial response from the States is encouraging. We expect more to come on board"

New Delhi , Oct. 12

THE Central Government-scripted pension blockbuster is promising to be a countrywide hit. Providing a major boost to the fledgling pension reforms plans, four State Governments - Andhra Pradesh, Madhya Pradesh, Tamil Nadu and West Bengal - have already indicated their willingness to the Centre to join the new pension scheme once it is operationalised.

Top Ministry of Finance officials said that while West Bengal has informally conveyed its desire, the remaining three States have formally approached the Centre to explore the possibility of joining the proposed scheme. While recently announcing the broad framework of the pension reforms, the Finance Ministry had said that State Governments would also have the option to avail of the scheme.

The response from these States should go a long way in allaying doubts over the ability of the proposed pension structure to attain the critical mass of subscribers required to make it sustainable. Critics had felt that the fresh Central Government recruits who would come under the scheme and the creamy layer of the unorganised sector might not be enough to make it successful. "The initial response from the States is encouraging. We expect more to come on board," Finance Ministry officials said.

Though modalities to be adopted by States to join the scheme would be worked out later, it is expected that on lines with the plans for the new Central Government recruits, State Government employees joining service after an agreed cut-off date would be asked to subscribe to the contributory pension scheme.

The move would help the States to also curtail their burgeoning pension liabilities. The pension payments of the four States during 2002-03 was Rs 9,008 crore, which accounted for nearly 30 per cent of the Rs 30,396 crore combined payout by all State Governments during the year.

Of the four, Tamil Nadu had the highest pension payout of Rs 3,175.55 crore in 2002-03, followed by Andhra Pradesh (Rs 2,560 crore), West Bengal (Rs 2,095.04 crore) and Madhya Pradesh (Rs 1,177.42 crore).

The rising pension burden of all State Government's can be gauged from the fact that as against a combined liability of Rs 3,593 crore in 1990-91, the figure rose to Rs 7,819 crore in 1995-96 while the budget estimates for the year 2003-04 stands at Rs 35,723 crore, according to Reserve Bank of India's data. As against this, the Centre's pension liability (excluding telecom) increased from Rs 15,346 in 1998-99 to Rs 21,172 crore in 2002-03 and is expected to be Rs 23,158 crore.

Article E-Mail :: Comment :: Syndication

Stories in this Section
States eager to hop on to pension reforms bandwagon — AP, MP, TN, Bengal evince interest in scheme

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line