It does not require any great knowledge in banking to know who is delivering the higher rate of interest to depositors—the Employees’ Provident Fund Organisation (EPFO) or commercial/cooperative banks. The EPFO is paying just 8.5 per cent to India’s 40 million-odd workers from the government and organised sectors when inflation is ruling at around 12 per cent. And low returns to the proletariat comes just when the commercial banks are outdoing each other in offering higher returns to depositors.This dismal scene may soon end with the private sector now taking over management of the provident fund (PF) corpus. Three asset management companies—ICICI Prudential, HSBC and Reliance Capital—will manage the Rs 2.5 lakh crore PF purse from September. That will end the State Bank of India’s (SBI) monopoly, though it will also get a slight handle. In a way, the SBI should be thanked for these changes: but for its indifferent management of PF funds, this critical reform would not have occurred.
Yet, the speed with which the Manmohan Singh regime cleared the issue should surprise none. It only demonstrates his government’s eagerness to push through meaningful and obvious reforms. Earlier, it could do little with the Left tying its hands down. Now that the Left has exited, the government seems to have got down to serious governance. Soon after Manmohan Singh won the vote of confidence on the nuclear deal, Finance Minister P. Chidambaram declared that the government’s next priority was to get the banking and insurance Bill cleared.
The recent turn of events has left the BJP, the principal Opposition party, in poor light. One can understand the Left’s antipathy to anything ‘private’. But what has suddenly gone wrong with the BJP, the only party after the Congress, which brought about watershed reforms on India’s economic landscape? After all, it was the BJP-led NDA that opened up the telecom, airline and insurance sectors. The subsequent boom in the stock markets and economic growth is a result of loads of private money that entered these sectors. It is surprising, precisely for this reason, to find the same party losing confidence in its own economic policies and cosying up with the Left. Or, even worse, the BJP could be opposing some of the government’s initiatives just for the sake of opposing them.
There are just a few months left before the nation gets into the poll mode, during which nothing really moves. Thus, the urgency to get all important Bills cleared by the Parliament and set India rolling. India’s progress is critical, not just for the rulers who espouse it, but also for the billion Indians.