Caught in a time warp
| The last three years have been a significant phase in India's pension reform saga. During this period, the NDA government set up the interim PFRDA and implemented the new pension scheme (NPS) for new central government employees in January 2004. The UPA introduced the PFRDA Bill in Parliament in order to protect the retirement savings of civil servants and the informal sector workforce. Seventeen of the more progressive States formally adopted this scheme for their own new employees and grew mandatory coverage to nearly one million members. |
| The path of India's pension reform over the last nine years has been riddled with many complex actions, reactions and inactions at the level of policymakers, researchers, regulators, aid agencies and the financial community. However, despite an overwhelming political consensus, the PFRDA Bill has continued to languish in Parliament over the last six sessions. This has prompted a steady stream of papers, articles and editorials in unanimous support of one of the most important social reforms in recent years. And as a result, a huge amount of information and data is today available in the public domain""both on the structural inadequacies and fiscal unsustainability of existing provisions, and on the conceptual merits of the NPS approach. This debate has also contributed to several new policy initiatives ranging from administrative reforms at the EPFO, the proposed Unorganised Sector Workers Social Security Bill, the implementation of AS-15 guidelines by the ICAI, the SEWA-UTI experiment with micro-pensions, and the decision to finally regulate the thousands of excluded PFs. |
| Against this backdrop, it is only natural for a new book on India's pension systems titled "facing the future", and written by a team of seven experts with an interesting mix of backgrounds and perspectives, to create an expectation of some new ideas. Or of a new direction or viewpoint to overcome the extended impasse. Or perhaps of a crystal-ball vision of the future of India's pension reform. In this, however, this book tends to disappoint as it provides very little new. Instead, it appears a compilation of a dated rear-view discourse on India's pension policy formulation. |
| Given their vast experience in Indian and global markets, the authors could certainly have achieved much more than they did with this book by simply focusing on currency. But their outcome appears to have been hampered by dated information. For instance, the summary of various existing pension provisions covered in the first 100-odd pages is based on data and information going back to 1999-2002. As a result, many important actions over the last three years are missing. The chapter on conclusions and recommendations is simplistic and based principally on the findings from a non-random survey on 2,700 individual respondents undertaken in 2003. The analysis and output from this survey emerge as a obviously prominent feature of this volume as they consume almost 75 per cent of this publication in the form of its Appendix. |
| While the co-authors undoubtedly have extensive experience and the best of intentions, they have perhaps missed the visible progress in this area over the last few years. Most of their recommendations, including a greater role for the DC system, harnessing existing financial sector capacity for asset management and service delivery, portability and robust recordkeeping, and tax concessions for subscribers are already covered by the PFRDA Bill. In this context, however, it is difficult to argue with them as their prescriptions very closely match the policy decisions already implemented over the last few years. |
| The Foreword, on the other hand, is more modern. It clearly encapsulates the public policy, fiscal, demographic and social compulsions for India's pension reform while responding to the present political concerns and resistance to its implementation. |
| This book could have proved relevant and useful in 2003. It fails to grip and appears somewhat unnecessary in 2007. |
| The author heads the Invest India Economic Foundation, which works in the pension space |
| Facing the Future Indian Pension Systems |
| David Hatton et al. Tata McGraw-Hill Price: Rs 625; Pages: 587 |