No formal proposal from Cairn for ‘amicable solution’ received, FinMin tells Lok Sabha

Our Bureau New Delhi | Updated on August 02, 2021

Also answers questions on Contributory Pension Scheme and Covid-related claims

The Finance Ministry on Monday informed the Lok Sabha that it has not received any formal proposal from Cairn for ‘amicable solution to the dispute within the country’s legal framework’.

In a written reply to an unstarred question, Minister of State in the Finance Ministry, Pankaj Chaudhary, said that the Hague-based arbitral tribunal pronounced its award on December 21, 2020 in favour of Cairn Energy and Cairn UK Holdings. It has asked India to pay Cairn an award amount of $1232.8 million plus interest and $22.38 million towards arbitration and legal costs.

Also read: LS okays amendment in General Insurance Business (Nationalisation) Act

When asked whether the government has received a list of Indian public assets in countries where Cairn has registered the enforcement and is pursuing efforts to monetise the arbitration award, Chaudhary answered in negative.

He also informed the House that an order has been passed by a French court freezing certain Indian government properties in the case pertaining to Cairn Energy. “The same has been communicated through diplomatic channels,” he said.

Contributory pension

In response to another unstarred question, the Minister ruled out reverting back to defined pension system. “Representations have been received demanding that the Government revert to the old defined benefit pension system. However, there is no proposal under consideration to revert to the old pension scheme in respect of Central Government employees recruited on or after January 1, 2004,” he said.

For the government employees joining service on or after January 1, 2004, a contributory pension system was launched. Under this, employees make contributions of 10 per cent (basic+DA) and the government contributes 14 per cent.

“Government has made a conscious move to shift from the defined benefit pension scheme to defined contribution pension scheme i.e. NPS, due to rising and unsustainable pension bill,” the minister said.

Under NPS, the pension wealth which accumulates over a period of time till retirement is invested prudentially as per investment guidelines prescribed by PFRDA and grows with a compounding effect. At exit, 60 per cent of the accumulated pension wealth is given as a tax free lump sum and the remaining 40 per cent is annuitised, which is also tax free. If a subscriber feels the need for a higher pension, he/she is free to choose up to full amount of the corpus to be utilised for purchase of annuity, which will further provide a higher pension amount.

Covid claim

In response to another question, the minister said in a written reply that 17.94 lakh Covid-related claims, amounting to ₹21,837 crore, have been settled between April 1, 2020 and July 15, 2021.

He also informed the House that an advisory has been issued by the IRDAI for expeditious settlement of health insurance claims, including through authorisation of cashless claims within one hour from the time of receipt of pre-authorisation request and last necessary requirement from the hospital, either to the insurer or to the third party administrator, whichever is earlier.

Published on August 02, 2021

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