Top PFRDA official not bothered over states staying out, exposing another fatal flaw in the project — will the scheme just remain another governmental non-starter?
The state governments have not been enthusiastic participants in the New Pension System (NPS) but this does not bother the Pension Fund Regulatory and Development Authority (PFRDA), which is trying to make the limping NPS run faster. Three state governments have refused to let their employees join the NPS.
When asked about the lukewarm response of the state governments, a top PFRDA official told Moneylife, on the sidelines of an event organised by FICCI in Mumbai today that “We don’t care much whether the state governments come on board or not. In any case, they can opt to stay out of the NPS.”
This shocking admission reveals another fatal flaw in the NPS.
NPS was supposed to be a retirement scheme for government and non-government employees. For Central government employees, this is a compulsory scheme of saving for retirement. For the private sector it is voluntary but there has hardly been any subscription to the scheme.
This is because there has been no effort to publicise it and distributors have no incentive to buy it. Now, if the PFRDA too cannot be bothered whether the state governments are not forced to channel the savings of their employees, the NPS will operate far below its true potential. The success of the scheme will depend on the economies of scale which will come about if there are more and more participants.
Since PFRDA has failed to get on board two of the largest segments, state government employees and the private sector, the NPS will limp along.
Meanwhile, in answer to another question posed by Moneylife, PFRDA claims to have convinced two corporates to switch their employee pension accounts under the NPS.
At Rs20 crore, the two unnamed corporates contribute half of the Rs40 crore of NPS' assets under management (AUM) from non-government or unorganised entities, said PFRDA chairman, Yogesh Agarwal.
Touting transparency and efficiency amongst the advantages for switching over to NPS, Mr Agarwal said that PFRDA is in talks to rope in 10-15 more corporates.
The NPS was introduced for government employees joining after May 2004 and for the unorganised (non-government) sector it was introduced on 1 May 2009. But it has not been able to take off due to reasons which include low incentives to those distributing the products, companies managing the funds and problems over who will do the marketing in a saturated market where NPS competes with the aggressive insurance and mutual fund companies.
New Delhi: Stock of foodgrains in government godowns was "practically double" the buffer norms, food minister Sharad Pawar today said, but maintained that responsibility of distribution to poor lay with the states, reports PTI.
"Our warehouses are full. As per buffer norms we have practically double...There are no shortcomings," Mr Pawar said in the Lok Sabha during the Question Hour.
Mr Pawar insisted that procurement, storage and allocation to states was the responsibility of the Centre but distribution through the public distribution system (PDS) was the job of the states. He blamed the states for not lifting foodgrains allocated to them.
"The government has made an additional ad hoc allocation of 25 lakh tonnes of foodgrains at below poverty line (BPL) prices for distribution to BPL families in states and union territories," Mr Pawar said.
However, since 7 September 2010 when the decision of allocation of this additional foodgrains was taken as per Supreme Court's suggestions, "hardly 6% of this was lifted by the states", he said.
Mr Pawar said the states can hire more warehouses to store excess foodgrains.
In reply to another question, MR Pawar said GPS tracking system was being used to keep an eye on vehicles carrying foodgrains in the wake of reports that grains meant for PDS were being sold in the open market.
He informed the Lok Sabha that Tamil Nadu and Kerala had taken the initiative to include items other than rice, wheat and sugar in the PDS and some other states were also working on it.
The trading session, which started weak this morning, witnessed fair bit of choppiness wherein the indices moved in and out of the red amid range-bound trading. The market settled higher on buying support in post-noon trade.
The local market opened lower tracking the weakness in the global markets. Buying on select counters soon vaulted the indices into the positive zone to touch the day's high. Range-bound trading as a result of political developments in the national capital as well as the financial capital made way for the indices to trade lower once again. The flip-flop continued but buying support in fast moving consumer goods, technology and realty stocks led the markets higher at the close of the session.
The Sensex settled 80.10 points (0.38%) higher at 20,932. The index oscillated between a high-low of 20,984 and 20,763, respectively. The Nifty stood at 6,301, a gain of 28.35 points (0.45%) over its previous close. The benchmark touched an intraday high of 6,311 and a low of 6,243 during the session.
The gainers outnumbered the losers today. The Sensex ended with 20 advancing stocks and 10 in the declining list. The Nifty had 37 gainers while 13 stocks ended in the red. Among the broader indices, the BSE Mid-cap index gained 38% while the BSE Small-cap index surged 0.85%.
The top gainers on the Sensex were Hindustan Unilever (up 4.30%), HDFC Bank (up 2.42%), TCS (up 2.25%), Sterlite Industries (up 2.04%) and Bharti Airtel (up 1.74%). On the other hand, the losers were led by State Bank of India (down 4.40%), Maruti Suzuki (down 1.20%), Reliance Infrastructure (down 1.03%), ONGC (down 0.84%) and Tata Power (down 0.44%).
BSE Fast Moving Consumer Goods (up 2.52%), BSE Realty (up 1.48%) and BSE TECk (up 1.11%) were the notable gainers in the sectoral space. BSE Oil & Gas (down 0.31%) and BSE PSU (down 0.23%) were the only losers in the sectoral space.
The Reserve Bank of India (RBI) has expressed concern over the falling credit offtake, which slipped to a poor 16.6% in the last fiscal. Noting that there has been steady decline in credit growth since FY04-05 when it had touched a high of over 30%, credit offtake declined to a low of 16.6% in the fiscal ending March 2010, RBI said in its statutory Report on Trend and Progress of Banking in 2009-10.
Markets in Asia ended mixed ahead of economic data and the outcome of the Group of Twenty (G20) meeting to be held in South Korea later this week. Renewed worries about debt problems in some European nations dragged down a few Asian bourses.
The Jakarta Composite surged 1.03%, KLSE Composite gained 0.44%, Straits Times rose 0.40%, Seoul Composite advanced 0.26% and Taiwan Weighted added 0.18%. On the other hand, the Shanghai Composite declined 0.78%, Hang Seng tanked 1.02% and Nikkei 225 lost 0.39% in trade today.
The National Stock Exchange (NSE) today said it has started mobile trading for registered clients, a move that would make trading simpler for customers. The service will enable member brokers to only go through the regular compliance before facilitating their clients for mobile trading.
The bourse claimed that for the first time an Indian exchange would provide such facility free of cost to its clients, through the brokers who have enrolled for "NOW" (the software which is being used by a majority of the NSE brokers).
Wall Street closed lower overnight after splendid gains seen last week. Renewed concerns over debt issues troubling European nations and a rise in the dollar were seen as the mains reasons for the decline. Analysts opine that the Group of Twenty (G20) meeting, to be held in South Korea on Thursday and Friday, will be the next driver in moving the dollar.
The Dow slipped 37.24 points (0.33%) at 11,407. The S&P 500 shed 2.60 points (0.21%) at 1,223. The Nasdaq inched 1.07 points (0.04%) higher at 2,580.
Inflows from foreign institutional investors (FIIs) on Tuesday were almost negated by outflows by domestic institutional investors (DIIs). FIIs were net buyers of stocks worth Rs505 crore while DIIs net sold equities worth Rs471 crore yesterday.
Thermax Ltd (down 1.70%) has informed the Bombay Stock Exchange (BSE) that it has acquired Danstoker A/S, Denmark, a leading European boiler manufacturer and its German subsidiary, Omnical Kessel (Germany). The acquisition valued at 29.5 million euros was completed on 8 November 2010. This acquisition will enable the company to leverage the ongoing renewable energy movement of Europe aimed at generating 20% of its overall energy generation from renewables.
IOL Chemicals and Pharmaceuticals (up 7.77%) has received the certificate of suitability (CEP) from European health regulator for its manufacturing facilities for the non-steroidal anti-inflammatory drug 'Ibuprofen'.
The CEP has been given by the European Directorate for the Quality of Medicines and Healthcare (EDQM), the company said in a filing to the Bombay Stock Exchange (BSE).
Ramco Systems (up 4.98%) has won a prestigious order from Gulf Petrochem, an oil refining and trading company based in Sharjah's Hamriyah Free Trade Zone.
As per the terms of the agreement, it will offer its end-to-end ERP including financials, supply chain management, process manufacturing, oil accounting, logistics, HR/Payroll and business intelligence. The company's enterprise solution will address all operations of Gulf Petrochem.