Tuesday 11 June 2013
Evil Designs of the Government in the name of Pension and Insurance Reforms
The UPA government has now decided to seek parliament nod to allow FDI up to 49% in Pension Funds in which no FDI is allowed till now and raise the FDI limit on Insurance from 26% to 49%. This is pernicious attempt to throw open the pension sector and further open the insurance sector to FDI and link them to the global financial system when the western world which operates and controls the global financial order itself is struggling for the survival of its own pension funds and insurance companies.
The opening of the pension funds and insurance companies to FDI will eventually lead to driving the pension and insurance monies into stock market like it has done in the US, where in the last three decades the investment of pension and insurance funds into stocks has gone up from 20% in 1978 to over 50 now and the share of banks fell from 57% to less than 30% now. Because of fall in global stock prices the asset cover for pension funds of 1500 S&P has fallen to 75% in 2011 as compared to 108% in 2007, according to Reuters. The US model of equity funded pension model is proving to be disaster. On the contrary the pension funds in Germany and other continental European countries and also Japan is bank funded, like in India now. Introduction of equity into pension funds while force equity investment out of pension funds which has caused havoc particularly in US where the shortfall in pension funds is estimated at $520 billions today for the S&Ps 1500 companies. In addition, the US government disability programme fund is projected to exhaust in 2016, the medicare funds 2024 and the social security reserves in 2033.
The returns of the pension funds hover around 2 percent. So they are in search of greener areas for investment to grow their income. In its research paper dated April 2012 JP Morgan has advised the pension funds to shift their investment to real estate, farm land etc in India. This shows that the the financial order of the West, and particularly US, is on the edge. They need markets to invest the paper monies which their economies have generated. The opening of the financial sector will enable them to get into sectors which are not open for foreign investment in India. So the opening of Insurance and Pension sector is dangerous to the country and to the people of India and their savings.
The government has no power to allow FDI in pension funds nor raise the limit in insurance to 49%. For both the government needs the approval of the parliament. The survival of this government is itself in doubt, with the UPA partners themselves taking positions against the FDI in retail and saying that they would oppose the decision in parliament and even bring in a no confidence motion.
When such is the position of the government, the media report that the UPA government has come up with its second wave of big bang reforms with the cabinet clearance for the introduction of foreign direct investment (FDI) in pension and increase in the FDI cap in insurance. Media reports of approving the proposal for oepning up and enhancing FDI in these twin sectors should not be misinterpreted as the final decision has to be taken through passing the bill in parliament. Public is not in favor of it, so the government should refrain from moving the bill to this effect. But, if the bill in still moved, the members of parliament should not ignore the public opinion in this regard.
The SJM cautions all the parties including the allies of UPA to be wary of the government’s strategy to give an eyewash to corruption with slew of so called reform announcements and expose their true character. The SJM warns the government against such cheap tactics and against any effort to sell India. The SJM will not allow this government to sell the country, financial system to foreigners. The SJM trusts that all political parties specially Bhartiya Janta Party as principal opposition party will not let down the country and stand up and expose the evil designs of the government and safeguard national interest.
click the down link for Hindi resolution or find attached file.
