|From Trivedi to EPFO|
|Friday, 16 March 2012 00:43|
Both suggest a reformist budget, but fingers crossed
With the government not seeming in any hurry to accept railway minister Dinesh Trivedi’s resignation or to roll back any of his modest hikes in passenger fares, the chance of a reasonably reformist Union Budget later today just got a bit of a boost. More so if you go by the view of the Mamata Banerjee camp that the Railway Budget was crafted by Trivedi in consultation with finance minister Pranab Mukherjee—if Mukherjee was party to a reformist Railway Budget, surely he has something similar planned for his Budget? Another move designed to anger didi more—in her anger with Trivedi and those who appear to be shielding him, it seems to have escaped her attention!—is the sharp cut in interest rates offered by the Employees’ Provident Fund Organisation (EPFO). As compared to 9.1% interest offered for 2010-11, interest rates for 2011-12 have been slashed to 8.25%. While the lower rates were recommended by the EPFO’s financial advisory committee after keeping in mind the EPFO’s precarious finances, this means EPFO rates will be lower than those for 5-year NSCs and even the Public Provident Fund. The labour ministry has been pressuring the finance ministry to step in, but the finance ministry has ruled this out.
None of this is to suggest the government won’t accept Trivedi’s resignation eventually or that it will not roll back some of the hikes—after all, it took Sushma Swaraj to stand up in Parliament and point out that the railway budget was now the property of the House and there was nothing Mamata could do now. How the government handles the Trivedi affair is important not just from the point of view of the signals it gives on reforms, but in terms of what it means for the safety of railways. While the Kakodkar panel has given a figure of R1 lakh crore for the railways’ safety needs, it says thanks to the increased axle load, even the 60 kg/m rails are fully stressed, so it is “not prudent to use 52 kg/m rails in Indian Railways”; in addition, there are another 43,000 ICF coaches that Kakodkar feels “are no more safe at the present operational speeds”. In the case of the EPFO, similarly, uncovered liabilities of the Employees’ Pension Scheme are already over R50,000 crore and growing rapidly. Both the EPFO and the Trivedi affair suggest today’s Budget may be a reformist one—the flip side is that if the government botches up even the limited reforms begun in the two areas, the Union Budget is in for some serious trouble in the year ahead.