Left thrives on poverty / Dec 12, 2005 / The Pioneer
From Indiapensions
Left thrives on poverty
Swapan Dasgupta
It is nothing short of astonishing that the Communists have been allowed to get away with one of the most brazen and shameful acts of short-changing the most vulnerable sections of the organised working class.
I am, of course, referring to the feigned indignation of the comrades at the rate of interest for Employees Provident Fund subscribers being fixed at 8.5 per cent by the Labour Ministry. In calling for a "balance" between economics and welfare, the members of the proletarian party want the interest rate hiked to 9.5 per cent, an increase that will cost the EPFO an extra Rs 1,176 crore - a sum which will have to be bankrolled by the Government.
It is not that the four crore or so PF subscribers don't deserve 9.5 per cent or even more. At a time when the sensex has crossed the 9,000 mark and ordinary small investors are securing something like 45 per cent annualised returns from conservative mutual fund equity investments, it seems downright churlish to deny the salaried sections a modest 9.5 per cent return on their tax-subsidised savings.
The question that the PF subscribers should be asking the Communists is: Why are we being kept out of India's prosperity agenda? It is a pertinent question. When low-risk investments of debt and a sprinkling of equity are yielding nearly 20 per cent, why should the hard-earned savings of the salaried classes be fetching only 8.5 per cent?
The questions should, of course, be directed at the Prime Minister who has been intimidated into assuring a review of the announced rate. However, in the main, they should be directed at those cussed, antediluvian representatives of trades unions who have prevented the accumulated mass of PF contributions from being used to maximise returns for the subscribers. Why are the PF authorities bound by law to channel their funds into bonds and other low-yielding securities when there are better avenues available?
The answer, of course, has everything to do with the traditional Left disdain for anything that remotely smells of the market. The Left doesn't want capitalism to be propped up by contributions from the savings of organised labour. They don't want the PFs playing the strategic role pension funds play in market-driven societies. They want the working class as far as possible to be dependant on State subsidies. They don't want the mazdoors to share the prosperity of corporate India.
The manner in which PF contribution is being mishandled because of Left's unwillingness to permit change is scandalous. A person entering the organised sector, where PF deductions are mandatory, is essentially being condemned to invest his savings (for which he also gets a tax incentive) in the most unproductive way. In short, upon retirement, his returns from a lifetime's savings will be far less than if he had handed over the money to a private pension fund. This is iniquitous.
Yes, there is a need to keep the risk profile of PF investments relatively low. Within that regulatory framework, the PF managers must have the flexibility to put their resources in whatever secures the best returns. Today equities are doing well. Tomorrow debt instruments may be back in favour. The PF authorities must have the necessary manoeuvrability to decide what is right for their members. This should even include the right to invest in global equities, commodities and currency hedge funds - in fact in anything that promises good and safe returns. PFs must become transparent and accountable.
The Left has blocked the pension Bill. It has prevented PF reforms and it is determined to prevent labour reforms. At every stage, it has done its bit to prevent the so-called "toiling masses" from extricating themselves from poverty and deprivation. As the PF controversy goes some way to demonstrate, the Left has developed a vested interest in poverty and backwardness. That is bad enough. What is even worse is that the fledgling attempts to create welfare nets for citizens are hamstrung by conceptual hallucinations of the Left.
