Sonia selects 'trusted lieutenant' Prithviraj Chavan as CM while NCP appoints Ajit Pawar as deputy CM of Maharashtra

Besides being a 'trusted lieutenant' of the Gandhi family, Prithviraj Chavan’s 'clean' image and Maratha caste tilted the balance in his favour. Surprisingly the NCP also changed its stance on caste-equation and opted to appoint party chief Sharad Pawar's nephew as new deputy CM 

As correctly predicted by Moneylife (, Congress chief Sonia Gandhi has selected 'trusted lieutenant' Prithviraj Chavan as the next chief minister (CM) for Maharashtra. He will take over as the 23rd CM of the state after incumbent Ashok Chavan was asked to resign due to alleged involvement in the Adarsh housing society scam. Taking a cue from the Congress, its partner the Nationalist Congress Party (NCP) also decided to rope in Ajit Pawar as deputy CM, replacing Chhagan Bhujbal.

Following the ouster of Ashok Chavan, the names that were doing the rounds were those of Prithviraj Chavan, Sushilkumar Shinde, Vilasrao Deshmukh, Mukul Wasnik, Balasaheb Thorat as well as the father-son duo of Balasaheb Vikhe Patil and Radhakrishna Vikhe Patil. Congress general secretary Rahul Gandhi, who was supposed to have supported Ashok Chavan earlier, said that the party wants someone "who is clean and can deliver". This shut the doors for Vilasrao Deshmukh.

Although Mr Shinde is a 'tried and tested' lieutenant of the Gandhi family, he was also named in the Adarsh housing scam and hence was sidelined for the CM's post.

Earlier in 1998, the Vikhe Patil father-son duo shifted their alliance to the National Democratic Alliance (NDA) to become Union and state ministers, respectively. In addition, it is alleged that a firm related with the Vikhe Patil family owes state power distribution company (Mahavitaran) about Rs1,800 crore. Both these factors went against them.

Mr Wasnik shares good relations with Rahul Gandhi, but is seen more as the party's man in Delhi and has no real mass base in Maharashtra. He and Mr Thorat were the lightweight candidates in the fray and would have been easy prey for the Nationalist Congress Party (NCP), which shares power with the Congress in Maharashtra.

Over the years, the NCP has increased its base in the state and is very eager to root out the Congress from many constituencies.

Therefore, the question remains, what tilted the balance in favour of Prithviraj Chavan? His family shares a very good equation with the Gandhi family and his mother Premalakaki Chavan was the state Congress chief of Maharashtra. Besides being a trusted lieutenant of the Gandhi family, Mr Chavan comes with a clean image and belongs to the Maratha caste.

Traditionally, the Maratha lobby has ruled Maharashtra most of the times and the same lobby is still dominant in state-level politics. Thus, the Congress high command replaced Ashok Chavan, a Maratha, with another Maratha, in order to keep the equations in the state-level politics intact.

According to a PTI report, Ajit Pawar, nephew of NCP chief, is likely to hold Home portfolio, besides Energy. NCP leader and civial aviation minister Praful Patel said, "After the meeting began, the first proposal was by Bhujbal that Ajit Pawar be named new legislature party leader. That made our job easy. Everyone applauded and welcomed the announcement."

Congress-NCP leaders will meet Maharashtra Governor K Sankaranarayanan on Wednesday night to stake claim to form the new government.

Prithviraj Chavan: A brief profile

Born on 17 March 1946, Prithviraj Chavan has a BE (Hons) from BITS, Pilani and an MS from the University of California, Berkeley (USA). He pursued higher studies at the University of California and spent some time working in the field of aircraft instrumentation and designing audio recorders for anti-submarine warfare in the US before returning to India and entering Indian politics. He is married to Satvasheela and has one daughter and one son.


Since 1 May 1960, Maharashtra has seen 19 chief ministers and except Vasantrao Naik, no other CM was able to complete his five-year term in office. Vasantrao Naik, from the Vidarbha region, was also the longest serving (about 12 years from December 1963 to February 1975) CM of Maharashtra. Vilasrao Deshmukh who was CM for two terms of about four years each follows him. NCP chief Sharad Pawar became CM for three times, but was unable to complete his full term in office.

With the exception of the Sharad Pawar-led Progressive Democratic Front (PDA) regime of about two years and the Shiv Sena-BJP combine's term of four-and-a-half years, Maharashtra has been ruled by the Congress since 1960.

At present, the Congress has 82 and the NCP has 62 members in the 288-member house.

Click here for the list of Chief Ministers of Maharashtra since 1960


Pension regulator’s incentive to funds to make New Pension System work will fall flat, say experts

PFRDA has given up on distributors of NPS and wants to get fund managers to push NPS. This makes no sense especially since fund companies are not able to sell even a tried and tested product like equity mutual funds after a slew of SEBI’s regulatory changes

The Pension Fund Regulatory and Development Authority (PFRDA) chairperson and former IDBI Bank chairman Yogesh Agarwal told reporters at the sidelines of a FICCI conference yesterday that point of presence (POP) service providers like banks have failed to make the New Pension System (NPS) work.

He does not think POPs will push NPS and the idea of using existing channels may not work. According to him, pension fund managers (PFMs) are the real stakeholders who should push the NPS because they are the ones who will enjoy investor funds for 30 to 40 years. He is in favour of additional incentives to PFMs that may have their own distribution channel to market NPS. Will PFMs be able to deliver, considering the fund companies' track record for selling mutual funds?

Interestingly, there are 40 financial institutions that have over 50,000 POPs. According to the regulator, only 4,000 locations are active for NPS sales. It means over 90% is still untapped. No wonder only 5,000-odd accounts have been opened in the non-government sector. The incentive for POPs in the first year is Rs100 and Rs80 thereafter. PFRDA is now giving a lump sum of Rs50 for each new account.

Like POPs, the PFMs also suffer from low incentives. They have bid for a fund management fee of a ridiculous 0.009% but the regulator seems convinced PFMs are the major stakeholders who will market NPS and hence should need additional incentive.

The price PFMs will have to pay for getting additional incentive is opening up of competition for PFMs that are currently only six. The consensus among the conference attendees was that there is no single ownership of NPS for customer service. There are entities like PFRDA, PFM, POP, and CRA (Central Recordkeeping Agency), but none as a single point of contact.

The regulator agrees that it was a mistake to assume that there will be instant demand for NPS. The realisation now is that it needs sustained marketing. The electronic poll taken at the conference showed that attendees felt equally strong about increasing incentives for POPs as well as PFMs. Let's hope the GN Bajpai Committee takes a balanced approach to address the issues with NPS.

The mutual fund industry has learnt this lesson the hard way. The ramifications of SEBI's ban on entry load last year is clearly visible today, where distributors have been virtually sidelined, leaving the industry in tatters. Since last August, there has been heavy mutual fund redemption across Asset Management Companies (AMCs).

In such a scenario, it is unthinkable that the PFRDA is trying to put the onus of selling on fund managers rather than incentivising POPs, who provide the interface between the customers and the product. Essentially, the PFRDA is asking PFMs to adopt the same broken business model that SEBI has been trying to implement, for the pension industry. Worse, PFRDA seems completely unaware of the huge fundamental difference between a pension product and other financial products like mutual funds and insurance.

A pension fund company can neither offer any product differentiation nor 'innovate' and bombard investors with a flurry of fanciful products, with matching advertisements, as insurance companies and mutual funds can do. It is difficult to comprehend how one can expect the pension fund managers to deliver results, when their investment choices are straitjacketed.

Industry experts strongly feel that the PFRDA is taking a wrong turn, saying that by shifting the responsibility of sales on to the fund managers, the PFRDA will dilute the role of these entities and can create a possible conflict of interest.

"The POP is not getting any brokerage. If there is no brokerage then why should even POPs promote this product; they have 30 products to sell today. It should be promoted by the government itself by advertising massively," said a sales head of a private fund house. 

"I don't see how they (pension fund managers) will take this additional burden of pushing NPS. Pension fund managers are very keen on equity, which is a small portion in NPS. Incentive should be based on performance rather than selling the product. A third party should sell the products, otherwise all fund managers will claim that they are the best and try to push their products," said a Mumbai-based certified financial planner (CFP). "That will destroy the pension product."




6 years ago

I did google to open my NPS account. Found that my neighbouring Kotak Bank is a POP. Downloaded the form & collected all the reqd docs & reached bank at a saturday morning 930 hrs. I asked for NPS & was shown to a customer Mgr. She took almost 45 mins to accept my form as the bank had opened only 3 accts since NPS was launched. I had to feed her with info as mentioned in the info sheet. Surprisingly She had no clue to perf of Kotak fund neither she was aware of the new Tax benefits proposed in Income Tax Bill 2011.

j k bajaj

6 years ago

A product like PPF is so popular without any marketing. The govt should make the redemption proceeds taxfree upto a contribution of 2.5 lakhs in tier I accounts and the public will queue up for this scheme

Borkar MR

7 years ago

In IRIS conducted Seminar last year, June 2009, Mrs.Singh, executive Director of PFRDA addsd one session. After her speech, I contacted her presenting my credentials, n requested her to come down n address the seminar which we were to conduct in Sept 2010. She told me to follow it up with formal communication. Which I did, email/req.letter, but there was no reply, not even acknowledgement. How the scheme can spread n work?


7 years ago

These so called Regulators should learn from vendors coming in local trains who sell 10 rs or 5 rs product with so much effort-then these guys will admit that they are real FOOLS compared to that local train vendor-who knows how a product is sold-

GST roll-out won't be from next April; no timeframe yet

New Delhi: The finance ministry today admitted that the proposed Goods and Services Tax (GST) regime will not be implemented from 1 April 2011 and said that no timeframe for the introduction of the new indirect tax system has been set yet, reports PTI.

Revenue secretary Sunil Mitra said it would be difficult to roll out GST without constitutional amendments, contrary to the suggestion made by some states.

"No question of it (GST) happening (from) 1 April 2011. Certainly not. It is not possible," Mr Mitra told reporters on the sidelines of a seminar by consultant Skoch.

For GST to be implemented, certain amendments to the constitution are needed, he said.

These amendments require time, Mr Mitra said, adding that the Finance Ministry has not decided on new timeframe for introducing GST.

Originally scheduled to be implemented from the beginning of this fiscal, the GST regime will subsume excise duty, service tax at the Centre's end and VAT on states front, besides some local levies surcharges and cesses.

However, differences between states and the Centre over the structure of the new tax regime led to delays in its implementation. Now, even the revised deadline will be missed.

Constitution amendments are required because, under the current mechanism, the Centre cannot impose tax beyond manufacturing, and states cannot levy service tax.

"Without the constitution provision in place, it would be difficult to bring GST. So obviously that (the constitutional amendment) has to come first. We have not got that yet. I cannot predict what will happen," Mr Mitra said.

Last month, some state finance ministers suggested an alternative model for GST to the one that was proposed by the Centre.

In fact, Gujarat finance minister Saurabh Patel had said it is not useful to discuss constitution amendment unless the issues of autonomy and fiscal flexibility of states are fully addressed.

The Centre had suggested a GST council, comprising Union finance minister as the chairman and state finance ministers as members, for effecting any changes in the new tax system. Besides, it suggested a dispute settlement authority.

Apprehending dilution of their autonomy, some states had proposed an alternative model, suggesting that the current Empowered Committee of state finance ministers be enlarged, to be chaired by the Union finance minister, instead of a council.

At a meeting in Goa last month, they also suggested doing away with the proposal on dispute settlement authority.

Indirect tax expert with Deloitte, Prashant Deshpande said that dropping of GST Council and common dispute resolution settlement body should mean eliminating the two important pillars of a unified and harmonious GST system.

Mr Mitra said, meanwhile, "The (Goa) meeting has been held.

I have, of course, reports from my colleagues who have been there, but the minutes of the discussion are yet to come to us."


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