Personal Finance Exclusive
Outlook and proposals for pension fund utilization

While presently the EPFO earns over 9% on its current base corpus of Rs3 lakh crore, this could be enhanced to 12%. Besides, old peoples’ homes could be another avenue of revenues that the government can look at


While speaking at the 29th Skoch Summit earlier this month, UK Sinha, chairman, Securities and Exchange Board of India (SEBI) called for implementation of pension fund reforms. This, he said, “is long overdue”. He is right. We have a number of things to consider when such a proposal is finally gets off the ground.
At the recent CII Mutual Fund Summit, Mr Sinha reiterated that if an asset (mutual fund) manager came and sought approval of SEBI for a theme involving a pension fund, he would be willing to recommend the same to the Government of India.
In this connection SEBI are already in touch with the tax authorities and such a move is probable only after the Direct Tax Code (DTC) comes into operation.
A brief reference to pension schemes in operation would be informative in debating this issue of profitable and useful utilization of funds.
There are several schemes in operation. There is the Civil Servants Pension Scheme (for employees recruited up to 2003), Employees’ Pension Scheme, Employees’ Provident Fund and the Special Pension Scheme, with the last named three are available to private sector employees.
According to information available, the Employees Provident Fund Organization (EPFO) has some 50 million subscribers (and growing) with a current base corpus of Rs3 lakh crore.  The EPFO has appointed CRISIL for monitoring the performance of the fund managers periodically, who have been allocated funds for this purpose.  
EPFO has SBI, HSBC, Reliance Capital AMC and ICICI Securities PD to invest and SBI was able to provide 9.31% return while HSBC (9.23%), Reliance (9.22%) and ICICI (9.20%) annual yield for the year ending March 2012.  It is possible that EFPO may be now looking for better utilization of the funds and, of course, much better return than what has been achieved so far.
In these circumstances, Mr Sinha’s call that even if a small portion of the fund is diverted to the equity market; it would be a great boost. Such an influx would bring about the much needed flow into the market and to this extent one does not have to depend upon the foreign inflow, which can also go out frequently, destabilising the market. After all, pension and provident funds are here to stay, to help the economy, thus making a sensible contribution.
In the meantime, we need to look at the very purpose of these schemes. When an employee opts for a pension scheme (floated by the company and/or takes additional coverage in any other form) it is meant to take care of the needs when he/she retires.
This issue, then, will take us to the crucial heritage we have in our society. Traditionally, in a family, it is the son who stays back even when he marries and settles down, in a joint family system. His parents may move with him wherever he goes, unless the parent(s) are employed. When this happens, it brings about the first break up in the joint family system as we know.  But then, these are ‘normal’ happenings in a family.
But, what happens when the earning father dies or his home-making mother dies?  If the husband (father) is a government employee, however small it may be, the pension comes to his spouse, who may be at the mercy of her son. What happens if she has no male issues? In a similar fashion, if the ‘retired’ father loses his wife, and is old, and is not “looked after”, the trouble starts.
With the spread of education, foreign exposure, our modern children tend to shirk the responsibility (they need ‘space’ and ‘freedom’) and do their best to send the ageing parent(s) to old peoples’ home. Some of them may even financially support their parents, and will ‘periodically’ keep in ‘touch’. Are these old peoples’ homes good and caring?  Now, that will be yet another story to write.
Why do we need to talk about these, when we are dealing with pension and provident fund utilization? After all these schemes are meant to take care of the people of old age or when the ‘rain’ comes! Exactly. It is just to meet these essential needs and well bearing of old people.
We shall now investigate further the amount of funds diverted for the returns above 9.24% expected by the EPFO. Should we wholeheartedly support the idea of diverting, even if a small portion, to the equity market envisaged by Mr Sinha? At the outset, yes, but with a provision the benchmark annual return is increased more realistically to about 12% or thereabouts, considering the booming and uncontrolled inflationary conditions in the country.
As a trial measure, why not the government authorise the investment in certain selected sectors which needs capital infusion, such as road and railways, power, health services and establishment of agricultural supports in terms of warehousing, cold storage and port developments? The EPFO could also be allowed to play a role as a private equity supplier and fixed deposits earning a guaranteed return over 12% from blue chip companies. These areas need to be seriously looked at avenues for investment since funds are available.
Besides, the EPFO also knows that millions of retired people may be left homeless and uncared for and it also knows that the existing old age homes are few and far between.
Why not take this as a social challenge? The government should appoint an apex body, with offices in all the states of the Union. They should build thousands of homes for these people; these should be compact, neat and functional and these old peoples’ homes should include health services. Such a move would make the construction industry boom; each state should provide the land and essential infrastructural facilities.  

Once such an idea is accepted, provident fund and pension fund rules could be suitably modified to provide the option of a guaranteed admission to old peoples’ homes, should the employee so desire!

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts. From being the advisor to exporters, he took over the mantle of a trader, travelled far and wide, and switched over to setting up garment factories and then worked in the US. He can be contacted at


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Healthcare system controlled by pharma companies at the cost of patients – Part I

The healthcare industry is virtually run by “big money” pharma companies and manufacturers of modern equipment. Doctors are mere pawns in their hands. A new series on solutions for the ailing healthcare industry

Aamir Khan has stirred a hornet’s nest, by exposing the malpractices in India’s healthcare services. Personally I am surprised by the sharp reaction of the medical associations and their intention to sue him or to boycott all his programmes. I thought he presented a rather balanced picture; the cut-practice, unnecessary investigations and operations, etc are issues that are discussed almost everyday by the media. What is more important is to find out what is ailing our healthcare services and what can be done about it. As a doctor, I feel that the least we could do is to stop the “blame-game” and the clamour to “punish doctors who misbehave”. Are they really guilty? If so, to what extent?         

Even the most well-informed and well-placed intellectuals have not understood the complexities of our healthcare system. There are two distinct streams to this service. The state provides “public healthcare” for essential services to benefit the maximum population. The importance given to public health services and the amount of money spent on it by the state varies from country to country. India spends hardly 0.5% of its GDP (gross domestic product) on health, which accounts for just around 26% of the total amount spent on healthcare; the remaining 74% comes from the pockets of Indian citizens. Even though the importance given to this section is enormous and primary health service is so neglected that a survey by some social institutions found that 80% of the people opted for private services for their primary health—despite abject poverty. Moreover, it found that less than 20% of the MBBS doctors were involved in primary health care—private or public. This is because the union and state governments seem to be inclined to leave health services primarily in the hands of the private sector.            

While the private sector dominates healthcare services in India, barring a small section of general practitioners, it consists of nursing homes, hospitals and specialists. The hospitals are turning high-tech and people end up spending three times of what the state is the spending for their health. Unfortunately, the private sector offers only the lucrative ‘cold’ work and modern high-tech services and thrusts all uncomfortable or non-profitable services on to the public sector—the poor, destitute, old people, tuberculosis, leprosy; even emergency services are a headache to them. “Health is the responsibility of the state” is a convenient argument.

WHY? Though George Bernard Shaw warned society a hundred years back, the people have steadfastly refused to accept that the (private) healthcare sector is an INDUSTRY—a highly profitable industry because of extremely low consumer resistance. Worse, now it sells attractive healthcare ‘products’ at profitable rates. Profit gets priority and healthcare becomes a subsequent objective. Hence, actual “health service” becomes a by-product and the proportion of its availability depending on the moral concepts of individual doctors. In just around 10% of the cases one gets miraculously good results and the patient is gifted with some extra and valuable years of good life. By then, the remaining 90% suffer so much economic loss that nearly a crore of Indians are being pushed below the poverty line every year because of crippling medical expenditure. Who is at fault and what needs to be done to correct this situation?
The medical industry is virtually run by “big money”, “ably aided” manufacturers of modern equipment and by big pharmaceutical companies. The media is cleverly used, first to create panic about every illness and then to glamorise new technology or a new ‘miracle’ drug/ invention which will save you from a ‘deadly’ illness. Doctors are mere pawns in their hands. The cost of research, PR and advertisements needs to be covered and the doctors must then earn money for the industry chain to make a profit. How can all this come cheap? The overuse of costly investigative and treatment modalities is further increased by:
a) lack of knowledge and expertise in specialist doctors
b) ever-increasing expectations of patients and
c) growing intolerance in society towards any untoward consequences during the management of treatment.

Earlier, there was a lot of emphasis on close observations and other clinical methods for diagnosis but now, due to the need to avoid ANY MISTAKE, the trend is towards “Objective Diagnosis”. Less you know, more you depend on technology. Less your expertise, more you need precision equipment to perform. The costs escalate, doctors are blamed, “internal trading” is suspected—and confirmed even without any evidence. But the fact is that many doctors are now totally dependent on these costly modalities; they are crippled without these aids for reasons mentioned. “Cut-practice” is but a small aberration for additional gains and merely indicates the same degree of corruption as is prevalent in the society in general. Totally unindicated misuse just for making money is an unpardonable crime. It does exist but I cannot judge the percentage of such unethical practices—could be 30% or so!

But overall, are you better off than previously in terms of your health-care? Facts are stranger than fiction. Average life expectation at birth is a useful indicator of the health of the community. Sri Lanka and Thailand have a much better lifespan than for Indians (more than 71 years compared to 64 for us). Reason? Those governments depend more on public healthcare, spending more than 50% of the total health expenses. And there is more attention to primary (and secondary) healthcare needs as indicated by a much better ratio of nurses in those countries, despite less number of doctors per 10,000 population. Mumbai fares the worst. It has 20 doctors, all sorts of specialists and all sorts of modern facilities, yet a Mumbaikar lives just around 58 years. This is universal; small town people have a much healthier life than those in metropolitan cities, all over the world. MODERN TECHNOLOGY DOES NOT OFFER YOU A BETTER HEALTH CARE EXCEPT SPORADICALLY. Mr Aamir Khan, don’t blame the doctors, blame the market, blame faulty medical education.

(Dr Sadanand Nadkarni, 80, is the former Dean of Sion Hospital, author of several books, a serious thinker of medical issues and hugely respected for a series of path-breaking ideas on improving the delivery of medical services to the aam aadmi. His book “Management of the Sick Healthcare System” is among the first to speak out about medical malpractice and other issues).




5 years ago

We indians have the capacity to corrupt any system even though it is meant for the general good of all concerned. We perhaps were following the British system of family practioner- refer- consultants-refer- superspecialists. But look at now how we have degraded this good practice into a money spinner. Refered doctor gets a cut , refering doctor gets a cut and specialist make hay when the sun shines. Like link-chain sales we have prohibited honest practioner from thriving. He has to be in the vortex of corrupt practices if wants recognition.If AmirKhan were to produce a TV serial based on doctors and their 'true practices' then it would run for years because there would be enough subjects to deal with. It is time our public are educated in the body's capacity to heal itself in most of the complaints of ailments. Only condition is that we should provide an ideal environment for it to do so. This way medicines could be marginalised without giving it the undue prominance it commands now.

Ganesh Krishnan

5 years ago

One of the reasons why the health care cost has increased rapidly in India is the prescription of newer drugs by doctors for trivial conditions. The reason for this is that the doctors' only source of information about drugs is from pharma companies and pharma companies would only like to promote newer products since they are more profitable. This results in higher costs for patients. Also indiscriminate use of antibiotics results in resistance to the drugs.

Nagesh Kini FCA

5 years ago

The write-ups by Drs. Nadkarni and Hegde make for a lethal and effective indictment of the medical profession as well as the pharma industry.
Both need to be reined in by the authorities and civil society in equal measure. Both deal with life and death matters of the citizens at large and should not exploit them which they are in fact indulging with impunity that needs to be urgently curbed.
The need for effective health care and the upping of expenditure has to be emphasized. Some of our public hospitals render yeoman emergency services in the best of facilities that even the best of high end starred hospitals do not provide. With teaching institutions attached there is constant attendence of top specialists and residents so much lacking elsewhere.
In any emergency nothing like a public medical facility.
With the PPP model fast catching up the health sector needs to explore adopting it by inducting dedicated existing and retired medical professionals and activists on board.


5 years ago

Amir Khan and his team can do research on this and prevent public money going into drain/into pockets of corrupt doctors and administrators of ESIC when other hospitals in Maharashtra (ESIS)-becomes ESIC.( state govt. run hospital handed over to central govt.ESIC [corporation] ).Money contributed by employers and government does not benefit employees covered by ESIC / ESIS act.

Similar situation must be there in ESIC model hospital in other states also.(MIDC,Andheri hospital is a ESIC model hospital)


5 years ago

From: Sucheta Dalal
Date: Sat, Aug 27, 2011 at 11:43 AM
Subject: ESIC and its mindless spending...
To: Sucheta Dalal

Dear activists.

The comment below makes and important point about how companies are spending money. Does anyone know any activist in that area who would like to do some research on this? We are too short staffed to do it ourselves and its not our core area either. Would appreciate inputs or if you can circulate it to people who can help.

Sucheta Dalal
Managing Editor

316-317, 3rd Floor, Hind Service Industries Premises
Shivaji Park Seaface. Off. Veer Savarkar Marg Mumbai 400028
T: 022- 24441059 – 60. Fax: 022-24442771
Name = shastrids
Email Id =

Looks like advertising support from the strangest of organisations, for example ESIC, which is sponsoring an automobile show on NEWSX television channel that is bleeding money since hardly anybody watches the channel, is perhaps influencing the rhetoric.

==being a holder of ESIC card-a SAMPLE live example of mountain of corruption-at Mumbai-MIDC-Andheri-east-marol-chakala hospital of ESIC.

Earlier State owned ESIS-hospital which might have been built with adultared cement in 1960/1970-by equally unscrupulus building contractors- is being just renoweted/repaired AT THE COST OF crores of rupees -instead of rebuilding entire building from scratch.

Probably one can make make more money under option of repairs AND RENOVATION ?????


Crores worth NEW equipments(indian and imported),furnitures are being purchased and dumped everywhere.

OLD JUNK AMBULANCES LYING IN THE COMPOUND and New equipments are being purchased.Hospital building ceilings are leaking all over. OPD Patients do not have proper waiting and washroom area.I AM SURE ELSEWHERE IN THE COUNTRY SIMILAR SITUATIONS EXISTS.



Nagesh Kini

In Reply to shastrids 5 years ago

ESIC has all the good conditions but badly managed by babus. The only remedy is a properly laid out PPP model, by inducting institutions or seeking the expertise of the likes of the Ramakrishna Mission which is successfully maintaining hospitals all over incl. Kolkatta and Mumbai

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