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Thursday, 22 December 2011 00:00
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Another Bill falls to UPA’s mercurial ally

 

With a second piece of critical legislation derailed by Mamata Banerjee, UPA Chairperson Sonia Gandhi needs to re-evaluate her tactics when it comes to dealing with this mercurial ally. The government withstood the BJP’s opposition to FDI in retail, but decided to pull back two weeks ago when Banerjee said she was against the proposal—Banerjee refused to buy the argument that if there were 3 million retailers who could potentially get hit by allowing FDI in retail, there were 30-40 times as many farmers who potentially stood to gain from Big Retail procuring directly from them, doing away with the costs involved in going through the current mandi system. And now, after the government agreed to accept the BJP’s regressive proposals on mandating assured returns—UTI collapsed because of this and, despite its very limited coverage, the EPS already has a R50,000 crore hole due to this—and it looked like the pension Bill would finally get passed, Banerjee’s opposition has ensured the government has pulled it back. And all of this, mind you, was done after Banerjee got a gift of R8,500 crore from the Centre!

All of which means if the UPA wants to do any kind of reform, it has to be more aggressive, looking at getting some legislation passed with the BJP’s support if need be, and to go out and actively campaign for its proposals. It needs to tell the electorate that while the current government-run EPS system has just 1-2 crore members—and the pensions here are so small they will take most of them below the poverty line after retirement!—any chance of the rest of the working class (45 crore) being able to contribute towards a nice pension plan has been nixed. A survey by the Invest India Economic Foundation—whose promoters are partners in India’s most successful micro-pension fund—a few years ago found that 80 million people were ready to invest in New Pension Scheme-type products and their investments could yield an AUM of over R12 lakh crore for pension firms over a decade. It may not be a bad idea to also remind Banerjee that she needs the Centre’s largesse just as much as it needs her. West Bengal is one of the worst-run states in fiscal terms—its 2010-11 fiscal deficit accounted for nearly 11% of all states’ deficit put together and, at 4.24%, its tax-to-GDP ratio is the lowest among general category states. If she wants the Centre to help her—at 4.94% in 2010-11, the state’s fiscal deficit is nowhere near the 3.5% the 13th Finance Commission had said it has to be in 2012-13—she needs to play ball too.

 

 

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