Relaxation of Procedure to be followed in considering requests for medical reimbursements GoI OM Dated 20/2/2009

Payment/ Reimbursment of Medical Expanses- from two Sources (Insurence agencies and GoI) GoI OM Dated 19/2/2009

GoI Clarification regarding commutation of pension Dt 16/2/2009

Implementation of Government’s decision on the recommendation of the Sixth CPC – Revision of provisions regulating gratuity

No.7/7/2008-P&PW (F)

Government of India

Ministry of Personnel Public Grievances and Pensions

Department of Pension and Pensioners Welfare

*******

Lok Nayak Bhawan,

Khan Market, New Delhi-110 003

dated 13^th February, 2009

OFFICE MEMORANDUM

Subject : Implementation of Government’s decision on the recommendation of the Sixth CPC – Revision of provisions regulating gratuity .

The undersigned is directed to say that in terms of para 7.1 of this Department’s O.M. No.38/37/2008-P&PW(A) dated the 2^nd September, 2008 issued in implementation of the decision taken on the recommendation of the Sixth Central Pay Commission, the benefit of adding years of qualifying service for the purpose of computation of pension shall stand withdrawn with effect from the date of issue of the O.M.

2. Sixth Central Pay Commission in Para 5.1.33 of its Report made the following recommendation:

“Linkage of full pension with 33 years of qualifying service should be dispensed with. Once an employee renders the minimum pensionable service of 20 years, pension should be paid at 50% of the average emoluments received during the past 10 months or the pay last drawn, whichever is more beneficial to the retiring employee. Simultaneously, the extant benefit of adding years of qualifying service for purposes of computing pension/related benefits should be withdrawn as it would no longer be relevant.”

This recommendation was accepted by Government of India vide Resolution No.38/37/2008-P&PW (A) dated 29^th August, 2008.

3. It is clear from the above recommendations/decisions, that the benefit of adding years of qualifying service is withdrawn for the purpose of computing pension as well as other related benefits such as gratuity.

4. This issues with the concurrence of the Ministry of Finance, Department of Expenditure U.O. No.4.2/40/2009-IC dated 12.2.2009

5. Ministry of Agriculture etc. are requested to take into consideration the above position while computing pension and gratuity of government servants who have retired since 2.9.2008.

Sd/-

(M.P. Singh)

Director (PP)

Tele:24624802

CSIR lab in second licensing deal with US pharma company

Bangalore: Chandigarh-based Institute of Microbial Technology, or Imtech, a constituent laboratory of the Council of Scientific and Industrial Research, or CSIR, has licensed a new drug molecule to the US’ Nostrum Pharmaceuticals Inc. for $3 million (about Rs15 crore).

Imtech will make a formal announcement on Monday, disclosing the terms of the deal, but its director Girish Sahni finds it’s creditworthy that his lab could strike the deal in an economic slowdown and in an environment where pharma companies “do not want to pick up molecules from Indian laboratories”.
The CSIR lab and New Jersey-based Nostrum have an association going back to July 2006 when the US firm obtained worldwide technology licensing rights from Imtech for a clot-busting therapeutic protein for $20 million.
Considered as signalling a paradigm change in the way government labs worked, that agreement also led, for the first time for any Indian lab, to the “incubation of that molecule” in Imtech. “We have learnt a lot working with Nostrum on that molecule which is progressing well and is being tested on monkeys in the US,” said Sahni.
This time, the discovery is about a novel bioactivity of Caerulomycin A, a known compound with antibiotic properties. In the new form, which is derived from a microbe, Caerulomycin has shown promise in so-called immunosuppression of T and B cells in both lab studies and in animal (rodent) models. The white blood cells called T and B cells are the protective cells that attack any foreign entity entering the human body.
This property of the compound, says Sahni, makes it a potentially good candidate for drugs that prevent organ transplant rejection as well as those used in autoimmune disorders. Autoimmune disorders, including type I diabetes and rheumatoid arthritis, are diseases where the body reacts against some of its own tissue and produces antibodies to attack itself.
While the clot-busting protein was the first proprietary recombinant DNA-based biopharmaceutical molecule licensed to an overseas company by any government institution, Caerulomycin is the first “small” molecule (used in regular drugs) to be licensed, say Imtech scientists.
The new molecule will be developed through traditional chemical synthesis. Imtech has a pipeline of 15-20 other molecules, which it is trying to improve to get advance derivatives in areas such as oncology and human antibodies.
“We are also looking for new compounds in the microbial diversity,” says Sahni, who thinks this deal would encourage other labs to commercialize their discoveries.
In recent past, CSIR has been making a serious attempt to derive monetary value out of its intellectual property. Director general Samir K. Brahmachari says even though CSIR is ahead of many public-funded institutions in the world in terms of the percentage of technology transferred to industry, it still has to achieve more in the area. “The amount of money realization is low but we are working on that.”
Courtesy : Livemint.com

Speed Clearing – Frequently Asked Questions(RBI)

Question 1	What is Speed Clearing ?
Answer	Speed Clearing refers to collection of outstation cheques through the local clearing. It facilitates collection of cheques drawn on outstation core-banking-enabled branches of banks, if they have a net-worked branch locally.
Question 2	Why Speed Clearing ?
Answer	As of now, outstation cheques are paid through two channels viz. on Collection basis or through National Clearing (Inter-city Clearing). This requires movement of cheques from the Presentation centre (city where the cheque is presented) to Drawee centre (city where the cheque is payable) which elongates the realisation time for cheques. Speed Clearing aims to reduce the time taken for realisation of outstation cheques.
Question 3	What is “Collection basis” ?
Answer	A person who has an outstation cheque with him deposits it with his bank’s branch. It is called Presenting branch. This cheque is sent for collection to the city where it is payable / drawn called Destination centre or Drawee centre. The branch providing the collection service at the Destination centre is called Collecting branch. On receipt of the cheque, the Collecting branch presents it in local clearing to the Drawee branch or the Destination branch. Once the cheque is paid the Collecting branch remits the proceeds to the Presenting branch. On receipt of realisation advice of the cheque from the Collecting branch, the customer’s account is credited. This, in short, is the process of Collection. When a cheque is taken on Collection basis by a bank, it credits the customer’s account after realisation. Alternatively, in the absence of a collection arrangement at the Destination centre, the Presenting branch will send the cheque directly to the Destination branch for payment.
Question 4	How long does it take for getting credit of an outstation cheque sent (i) on Collection basis and through (ii) National Clearing (Inter-city Clearing) ?
Answer	Generally, it takes around a week to three weeks time to get outstation cheques realised through Collection basis. In case of National Clearing, it takes around a week's time. National Clearing is an arrangement under which the Clearing Houses managed by RBI provide inter-city cheque collection service to member banks of those Clearing Houses.
Question 5	Is National Clearing available in all cities ?
Answer	No. It is available at fifteen cities viz. Ahmedabad, Bangalore, Bhopal, Bhubaneshwar, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Kolkata, Mumbai, Nagpur, New Delhi, Patna and Thiruvananthapuram.
Question 6	How does the Local Cheque Clearing work ?
Answer	In Local Cheque Clearing in 61 major centres, cheques are processed at the Clearing Houses on mechanical sorters, using Magnetic Ink Character Recognition (MICR) technology. Local Clearing handles only those cheques that are drawn on branches within the jurisdiction of the local Clearing House. Generally, the distance between the Clearing House and the participating branches is defined, taking into account the local transportation and communication facilities as the cheques have to physically move to and from the Clearing House. For example, for a cheque to be processed in Local Clearing in Mumbai, both the presenting and drawee branches should be within the jurisdiction of the Clearing House in Mumbai.
Question 7	How does the Speed Clearing work ?
Answer	Banks have networked their branches by implementing Core Banking Solutions (CBS). In CBS environment, cheques can be paid at any location obviating the need for their physical movement to the Drawee branch. The concept Speed Clearing combines the advantages of MICR clearing with CBS. Cheques drawn on outstation CBS branches of a Drawee bank can be processed in the Local Clearing under the Speed Clearing arrangement if the Drawee bank has a branch presence at the local centre.
Question 8	When will the beneficiary get funds under Speed Clearing ?
Answer	As on date, the local cheques are processed on T+1 working day basis and customers get the benefit of withdrawal of funds on a T+1 or 2 basis. 'T' denotes transaction day viz. date of presentation of cheque at the Clearing House. So, the outstation cheques under Speed Clearing will also be paid on T+1 or 2 basis.
Question 9	How is Speed Clearing an improvement over National Clearing ?
Answer	In case of National Clearing the cheque is realised in around a week's time. Under the Speed Clearing, it would be realised on T+1 or 2 basis viz. within 48 hours. National Clearing is restricted to cheques drawn on the specified locations. Speed Clearing has no geographical limitation. Cheques drawn on any location may be cleared as long as the branch is in CBS. National Clearing necessitates movement of the cheque to the Drawee centre. Speed Clearing facilitates the clearing of such cheques locally without the need to move the cheques to the Drawee centre.
Question 10	Which are the centres where Speed Clearing is presently available ?
Answer	Speed Clearing is currently available in 41 MICR centres.
Question 11	What about charges for cheques cleared through Speed Clearing ?
Answer	Presenting branches are currently permitted to levy charges at a rate not exceeding Rs.150 per cheque (inclusive of all charges other than Service Tax) for cheques of above Rs. 1 lakh presented through Speed Clearing.

SEBI, IRDA flout norms on surplus funds: CAG

New Delhi, Feb. 21 The capital market and insurance sector regulators — Securities and Exchange Board of India (SEBI) and Insurance Regulatory and Development Authority (IRDA) — are flouting Finance Ministry instructions by parking their surplus funds generated through fee charges, penalties, among other things outside the Government accounts.

This has been stated by the Comptroller & Auditor General of India (CAG) in its report on the Union Government accounts for 2007-08. The CAG had in its earlier reports also highlighted that SEBI and IRDA practice on parking of surplus funds were inconsistent with constitutional provisions.

As at end March 2008, sums aggregating to Rs 1,325.49 crore were parked outside the Government accounts. Of the Rs 1,325.49 crore, SEBI’s share stood at Rs 987.95 crore, with the balance Rs 337.54 crore relating to IRDA.

Issuing directions

The CAG report for the Union Government accounts 2007-08 said the Finance Ministry had in January 2005 directed all ministries and departments of the Government to ensure that funds of regulatory bodies are maintained in the Public Account.

“Retention of funds by IRDA and SEBI outside government accounts is not only violative of government instructions, but is also inconsistent with the Constitutional provisions,” the CAG has said.

These bodies have been established by Acts of Parliament and are to be treated as “State” within the meaning of the expression used in Article 12 of the Constitution of India. The monies collected by these bodies, therefore, should be credited to the Government account under Article 266 of the Constitution of India, according to CAG.

While IRDA was specifically directed earlier by the Finance Ministry in July 2002 to deposit its funds in the Public Account, the CAG report noted that no such specific direction has been issued to SEBI despite their continued violation of the Government’s instructions.

The CAG has said the retention of funds by IRDA and SEBI outside government accounts is also not consistent with the accounting procedure followed by other similarly placed independent regulatory bodies such as Telecom Regulatory Authority of India, which are maintaining their accounts as part of the Government accounts.

© Copyright 2000 - 2008 The Hindu Business Line

Govt staff can see boss’s secret report

Calcutta, Feb. 20: Calcutta High Court today said all central departments other than defence were bound to disclose to employees the contents of their annual confidential report on request.

The order could have far-reaching consequences as it would act as a precedent in case of state government employees as well.

The report, better known as ACR, determines the chances of government employees’ promotions and postings.

The division bench of Justices A.K. Banerjee and P. Mondal said: “Central government authorities, other than defence, are bound to communicate the contents of the ACR of an employee whenever he or she asks for it.”

The judges also said that if the ACR was not revealed to an employee, it would be a violation of “natural justice.” “If an employee has no access to his ACR, how will he rectify his errors?”

The private sector, which also conducts an annual assessment of employees, shares it with them.

A senior IAS officer said: “A subordinate should know how his seniors rate his performance. The report will still remain confidential as it will only be between the junior and the senior and not pasted on a notice board.”

The court order followed a petition by Sourin Biswas, who became a senior Geological Survey of India (GSI) chemist after 11 years of service in 1993 but was twice denied promotion thereafter because of the ACR.

In 1998, a list was drawn up on the basis of seniority for promotion to the post of assistant director. “Biswas was at No. 30, but a person listed below him was promoted while he was not. In 2007, Biswas, the No. 2, was denied promotion,” said his lawyer Smarajit Roy Chowdhury.

When Biswas enquired with his bosses why he was being left out, they said his ACR was not good enough. “When he wanted to access its contents, the authorities said it was confidential.”

Biswas first moved the Central Administrative Tribunal. After it turned down his plea, he moved the court.

The GSI’s lawyer asked the court: “How can the authorities communicate the contents of a confidential report to an employee?”

The court rejected the argument, saying employees could not improve themselves if they did not know their drawbacks.

A senior bureaucrat said that before Independence, the ACR used to be called the Confidential Character Report. “The British bosses wanted to keep track of whether employees were engaged in the Freedom Movement or where their sympathies lay.”

Courtesy : The Telegraph

No pay commission arrears to be paid before elections

Govt misses opportunity to boost demand, say consumer goods makers.

Consumer goods manufacturers, expecting to see a revival of demand from the nearly Rs 16,500 crore Pay Commission arrears for government employees, are likely to be disappointed.

More than 8.3 million central government employees and pensioners will have to wait till at least August 2009 to receive the second instalment of Sixth Pay Commission arrears.

This became clear from the Interim Budget presented last week, which has not sought Parliamentary approval in its expenditure estimates for the first four months of the next fiscal starting April 2009, said a senior finance ministry official.

“The new government will have to seek Parliament approval when they submit the budget,” said the same official.

The Rs 32,000-crore domestic consumer durables industry was betting big on the Pay Commission’s recommendations to act as an added impetus to sales. Industry observers believe the arrears would have enabled a major chunk of consumers from smaller towns and cities to go in for their first purchases, boosting the mid-market segment of the business.

“It will be a missed opportunity,” said V Ramachandran, director, sales and marketing, LG Electronics India. “Typically, disposable income goes into discretionary purchases and since the durables category tends to attract this expenditure, it would have supported growth.”

Pay Commission largesse of around Rs 11,000 crore for an estimated 4.5 million government employees was widely regarded as the key reason for a 30-35 per cent boost in festive season consumer electronic sales last year, from a 7-10 per cent average growth for the year. In fact, it was consumer durables that drove industrial growth of 4.8 per cent in September.

Companies have been clamouring for a fiscal stimulus package from the government, as the domestic demand has also been falling sharply in the past few months.

India’s factory index reported a dip in both consumer durables (like refrigerator, television sets) and consumer non-durables (like toothpaste, soaps) in December 2008, the latest month for which data are available.

The government is estimating a total spend of Rs 47,500 crore for implementing the Sixth Pay Commission in the current and next financial year. Around Rs 27,000 crore is towards payment of arrears, as the implementation is from 2006.

Courtesy : Business Standard

Registration of CSIR for availing customs/Central Excise dUty exemption

Opening of bank accounts

Lok Sabha

Raghuram Rajan Committee Report had observed that over 40 per cent of India's working population earn but have no savings. Some of the major recommendations of the committee include:

i. expanding access to financial services;

ii. freedom to banks to setup branches and ATMs;

iii. creating more efficient and liquid markets;

iv. greater participation of foreign investors in domestic market;

iv. creating a growth-friendly regulatory environment; and

v. creating a robust infrastructure for credit.

The Government of India has taken the following steps to ensure opening of more bank accounts, especially in the rural areas of the country including Andhra Pradesh:

• Banks, have been advised to make available a basic banking 'ïî frills' account either with 'nil' or very low minimum balances.

• Small borrowers with loans settled under the one time settlement scheme have been made eligible to access fresh credit.

• Banks have been advised to issue General Credit Cards to eligible beneficiaries without insistence on security, purpose or end use of credit.

• Banks have been permitted to utilise the services of Non-Governmental Organisations, Self Help Groups, Micro Finance Institutions and other Civil Society Organisation as intermediaries in providing financial and banking services.

• All Scheduled Commercial Banks and Regional Rural Banks have been advised to achieve the target of adding 250 rural household accounts during this year. Most of the Public Sector Banks have achieved their targets for the year 2008-09.

This information was given by Minister of State for Finance, Shri Pawan Kumar Bansal in reply to a question raised by Shri K.J.S.P. Reddy and Shri Abdullakutty in Lok Sabha today.

Bogus caste certificates

Some complaints of appointment on the basis of fake caste certificates have come to the notice of the Government.

If it is established that a candidate secured employment on the basis of a fake certificate, he is removed from service. Instructions have been issued that the caste status of a candidate claiming to belong to Scheduled Caste, Scheduled Tribe or Other Backward Class should be verified at the time of initial appointment as well as at the time of every important upturn of employee’s career so that any person may not get appointment on the basis of fake certificate. Information about fake caste certificates is not centrally maintained.

This information was given by the Minister of State in the Prime Minister’s Office and Ministry of Personnel, Public Grievances & Pensions, Shri Prithviraj Chavan in a written reply to a question in the Rajya Sabha today.

Visitor profile of Blog

Dear Readers Thank you for your visit . Here is a network location of various visitors visiting my Blog since inception of Blog. This has nothing to do with invasion of privacy of viewers but to specifically thanks the persons visiting from these locations.

Govt corrigendum on Transfer/Retirement TA (Rate of Transport) Dated 18/02/2009

Here comes one charger for all mobile phones

BARCELONA, SPAIN: Leading mobile phone manufacturers have agreed to introduce a universal charger for handsets.

This was announced on Tuesday, at the Mobile World Congress in Barcelona, by the GSMA (Groupe Speciale Mobile Association), which represents more than 750 of the world's cell phone operators.

The new interface will be a mini USB. Blackberry Storm already uses this interface. The companies that have signed for the change include Nokia, LG, Motorola, Samsung and Sony Ericsson.

It is expected that the universal charger will come into existence by 2012.

Though this move would reduce the mobile accessories market drastically, the universal charger has a green aspect to it. It will reduce the standby energy consumption by 50 per cent, thus reducing the amount of greenhouse gases. The estimate is based on the potential elimination of 51,000 tonnes of duplicate chargers.

"The mobile industry has a pivotal role to play in tackling environmental issues and this program is an important step that could lead to huge savings in resources, not to mention convenience for consumers," GSMA CEO Rob Conway said in a statement.

With this move, GSMA expects that it could ship mobile phones without a charging plug and cable because everybody would have one.

How do you see this 'green move' on the part of mobile phone manufacturers? Will it help effectively address the environmental concerns?

©CyberMedia News

Open Source Drug Discovery : CSIR

The Council of Scientific and Industrial Research (CSIR) has launched an innovative ‘Open Source Drug Discovery’ (OSDD) programme to find cures for infectious diseases that affect the developing world. OSDD is a CSIR led consortium with global partnership with a vision to provide affordable healthcare to all and especially to the weaker sections of global populations. It draws inspiration from the success of open source movements in software and the Human Genome Sequencing Project. The Minister of Science and Technology and Earth Sciences, Shri. Kapil Sibal officially launched ‘Open Source Drug Discovery’ (OSDD) programme on 15th September 2008. The project was globally launched during the Human Genome Meeting 2008 in Hyderabad on 28th September 2008.

Market forces discourage big pharmaceutical companies from developing drugs for infectious diseases that affect the developing world since such projects have long gestation period, heavy Research and Development (R&D) costs and low success rate. Even when successful, the returns are low since these diseases generally afflict the poorer sections of the society. It is estimated that only about 1% of newly developed drugs are for tropical diseases, such as tuberculosis, malaria, lymphatic filariasis, dengue, leishmaniasis (kala-azar), etc. The traditional patent driven model, valuable in many fields, has failed to drive research and development of drugs for diseases affecting the developing world.

The OSDD model, on the other hand, represents a viable alternate model of drug discovery for infectious diseases. It expands resources for research manifold by allowing open access and collaboration among voluntary researchers. Towards this end, CSIR has set up a web portal http://www.osdd.net. This portal provides a platform for collaborative research, data on the pathogens, tools for data analysis, and discussion forum for members to share ideas, projects for students to participate in drug discovery, etc., The collaborative research process provides better quality, higher reliability, more flexibility and lowers the cost of drug discovery. OSDD harnesses the collaborative genius of the internet, the distributed computing power and access to diversified expertise providing a global platform where biologists, chemists, software professionals, private enterprises, students and others can collaborate. As of 5th January 2009, there are more than 525 registered participants from all across the globe. In addition, there are nearly 50 projects posted online by scientists from various research institutes/universities/industry open for collaboration.

In OSDD the entire process of drug discovery is divided into ten Work Packages (WPs) which are posted on the OSDD website. As part of an on-line community, the contributors may work from anywhere in the world at any time that suits them. Any idea, software, article or molecule that helps in expediting the process of drug discovery is treated as a contribution. All contributions will be peer-reviewed and appropriate credits will be assigned for each contribution. In addition, challenges are also posted on the OSDD website and appropriate rewards given for correct solutions. OSDD welcomes all who are ready to share their time/resources. In the OSDD programme, a core committee of expert scientists monitors the entire process of drug discovery closely. The entire drug discovery process is conducted online and the New Chemical Entities (NCEs) will be generic as soon as discovered. This will enable pharmaceutical companies to bring the medicines to the market, and yet keep drug prices competitive.

Until recently, drug discovery was a “wet” science – if scientists wanted to identify potentially therapeutic chemicals, they had to do experiments in test tubes, and use live cultures or animals. Developments in bioinformatics have enabled researchers to do drug discovery ‘in silico’ – that is, by sitting in front of their computers or in “dry” labs. Researchers can compare, on computers, potential disease targets against large chemical databases to identify potential drugs. The Internet encourages synergizing of the inventive spirit of a large number of researchers by uniting them in a collaborative mode for drug discovery. The laboratory experiments during this process will be carried at CSIR sponsored labs.

Drugs Against Tuberculosis

In the first phase, drugs against Tuberculosis (TB) bacillus (Mycobacterium tuberculosis), will be undertaken. This includes drugs against both drug resistant and latent tuberculosis. Why Tuberculosis as the first disease targeted? TB is the leading cause of death from bacterial infection. WHO reports that one-third of the world’s population is currently infected with TB. The estimated incidence of TB in India is 1.8 million new cases annually. This amounts to 3 TB deaths every 2 minutes. The current TB therapy was developed in the 1960’s and no major advancement in treatment has emerged for almost half a century. Of the 1,556 new chemical entities marketed worldwide, between 1975 and 2004, only three were for TB. The presently used drugs- Isoniazid, Rifampicin, Pyrazinamide and Ethambutol- with standard therapeutic duration of 6-9 months, require careful monitoring if drug resistance is to be avoided. The Multi-Drug Resistant (MDR) TB takes longer to treat with second-line drugs, which are more expensive and have stronger side-effects. Extensively Drug Resistant (XDR) TB can develop when these second-line drugs are misused or mismanaged and available therapy therefore also become ineffective. Because XDR-TB is resistant to first- and second-line drugs, treatment options are seriously limited (Source – WHO, ICMR).

Incentives

To encourage students and researchers to participate, problems encountered in drug discovery process will be posted as “Challenges” on the OSDD website. Each problem will have a pre-determined set of credit points associated to it. The best solutions, as decided by a committee of peer reviewers, will be commensurately rewarded. The registered participants will be provided with colour coded membership cards. Users can upgrade the card (change colour) by providing more quality-inputs. CSIR is exploring the possibility of tying up with banks to add incentive features to the cards issued to OSDD members. Students may also enroll online for summer projects of their choice from the list of projects hosted on the web portal. The progress of each project will be assessed by their online project mentors. Students would also be awarded certificates to acknowledge their contributions.

Funding

In the Eleventh Plan, CSIR has earmarked Rs. 150 crores for the OSDD project. An equivalent amount of funding is expected to be raised from international agencies and philanthropists. About Rs. 46 crores has been already released by CSIR for this project.

Partners

In this largest ever collaborative research project on drug discovery, various scientists/researchers and institutions/universities/industries are collaborating. The current partners include Institute of Genomics and Integrative Biology (IGIB, Delhi), Institute of Microbial Technology (IMT, Chandigarh), Central Drug Research Institute (CDRI, Lucknow), Jawaharlal Nehru University (JNU, Delhi), Centre for DNA Fingerprinting and Diagnostics (CDFD, Hyderabad), National JALMA Institute of Leprosy and other Mycobacterial Diseases (JALMA, ICMR, Agra), Anna University – K B Chandrasekhar (AU-KBC, Chennai), Cambia (Australia), Institute of Life Sciences (ILS, Hyderabad), Sun microsystems (India), LeadInvent (Delhi), Jalaja Technologies, TCG LifeSciences (Kolkata).

Participants

As on 5th January, OSDD has more than 525 members from 17 different countries across the globe.

*Inputs from Institute of Genomics and Integrative Biology, Delhi

RTS/VN
SS-11/SF-11/20.01.2009

Vigilance Excellence Awards -2009 By Vigilance Study Circle

No.VIG/VSC/09/

Dated 01.01.2009

Dear Sir,

Sub: Vigilance Excellence Awards -2009

New Year Greetings to you from all of us at Vigilance Study Circle, Hyderabad. We wish that the New Year will usher in more Happiness, Peace and Professional satisfaction to you and members of your team.

As you are aware, VSC, Hyderabad has been striving to provide a Platform to Vigilance Professionals in PSUs, Banks and Ministries / Departments of Government of India to exchange views and experiences. It has been its endeavour to recognise and promote excellence in the field of Vigilance. Towards this end, VSC has instituted Vigilance Excellence Awards in 2008 and awarded them to 10 Vigilance Officers from PSUs and Banks based in Hyderabad, during the anniversary celebrations held in July 08. As VSC is an umbrella organization for similar initiatives in other parts of the country and as chapters of VSC have already been setup in other cities, it is felt that it would be appropriate to widen the scope of Awards to cover all PSUs, Banks and Ministries/ Departments of Government of India. Accordingly, it has been decided to give 8 Awards every year, one in each group, details of which are given below.

It is requested that CVOs of all the PSUs, Banks and Departments/Ministries of Government of India may forward their nominations by 31.03.2009.

Objectives of the Award:

• To recognize the excellent work done by Vigilance Professionals from PSUs, Banks and Ministries/ Departments of the Government of India in the field of Preventive Vigilance and Punitive Vigilance.
• To disseminate information on the outstanding and innovative work done by Vigilance Professionals by publishing a compilation of good case studies, submitted for the Award, and also by publishing the Award winning case studies in the Souvenir of VSC, released during the Anniversary celebrations.
• To motivate Vigilance Professionals to excel in the discharge of their responsibilities.

Procedure for Selection of Awardees:

• VSC will call for nominations for Awards in the month of January, every year.
• CVOs from PSUs, Banks and Ministries and Departments of Government of India will be invited to submit case studies in the fields of Preventive Vigilance and Punitive Vigilance. The case study shall be drawn from the work done by the Vigilance Professionals during the previous calendar year.
• Each organization can nominate a maximum of 2 case studies for the Award.
• In case more than one vigilance professional are directly involved in the said work, the Award will be given to the whole team and will be treated as one unit.
• Case studies shall be submitted as follows:
  • The case study shall be written in lucid manner and should not be more than 1500 words. It should be printed on one side of the paper in Arial 13 Font, in double line spacing. A soft copy in the form of CD should also be sent along with the nomination. The name of the organization and those of the Vigilance Professionals involved shall not be mentioned in the body of the case study. These particulars should be mentioned in the covering letter by the CVO.
  • The case study on Punitive Vigilance should cover the following along with other details:
  • How information about the omission or commission has been received? i.e. whether through a complaint/source information/ inspection etc.
  • Methodology followed during investigation/verification of the information received.
  • Tools i.e., Forensic Sciences, Sample Analysis etc., used during the investigation.
  • Logic or reasoning followed in resolving the matter.
  • Final outcome of the investigation
  • Action taken by the organization on the basis of recommendations given by the Vigilance Department.
  • Case studies on Preventive Vigilance should cover the following along with other details:
  • Improvements suggested in systems/procedures as a result of system studies or as a consequence of investigation/checks/ inspections.
  • Analysis of existing systems and how loopholes in the system or procedures have been exploited; how the suggested improvements can reduce leakages and improve efficiency, etc.
• The case studies should be analytical, and shall not be a mere narration of events or facts.
• While sending the case studies, the covering letter along with the hard copy and soft copy of the case study shall be placed in an envelope superscribed as “Vigilance Excellence Awards 2009 in Group ____” and be sent to the following address:

Shri N.V. Raja Shekar, IFS
President, Vigilance Study Circle &
Chief Vigilance Officer
NMDC Limited ;
10-3-311/A, Castle Hills
Masab Tank, Hyderabad 500 173

• The nomination should reach the VSC by 31.03.2009.
• VSC will shortlist the case studies received and send them to a Committee of eminent persons to evaluate the case studies and select the best one in each group for the Award. The process shall be concluded by 31.05.2009. The decision of the Committee of eminent persons shall be final
• The Award will consist of a Scroll containing citation plus cash price of Rs.5, 000/- in each group.
• All case studies submitted for the Award will be published in a Booklet and the Award winning ones will be published in the Souvenir released during the anniversary of VSC.
• The Awards will be distributed during the anniversary celebrations of VSC by the Chief Guest.
• Prize winners should travel to Hyderabad on their own. Local Hospitality of Board and Lodge will be provided by VSC, Hyderabad.
• For the purpose of selecting the Awardees, all the Ministries in Government of India are divided into 8 groups as follows and the PSUs pertaining to a particular Ministry will also form part of that Group.

Group 1:

Ministry of Finance including Banks and Insurance Companies

Group 2:

Ministry of Agriculture
Ministry of Chemicals and Fertilizers
Ministry of Earth Sciences
Ministry of Environment and Forests
Ministry of Rural Development
Ministry of Water Resources

Group 3:

Ministry of Youth Affairs and Sports
Ministry of Women and Child Development
Ministry of Science and Technology
Ministry of Culture
Ministry of Health and Family Welfare
Ministry of Women and Child Development
Ministry of Youth Affairs and Sports
Department of Atomic Energy
Department of Space

Group 4:

Ministry of Coal
Ministry of Labour and Employment
Ministry of Mines
Ministry of New and Renewable Energy
Ministry of Petroleum and Natural Gas
Ministry of Steel

Group 5:

Ministry of Communications and Information Technology
Ministry of Information and Broadcasting
Ministry of Shipping, Road Transport and Highways
Ministry of Tourism
Ministry of Civil Aviation

Group 6:

Ministry of Commerce and Industry
Ministry of Micro, Small and Medium Enterprises
Ministry of Food Processing Industries
Ministry of Heavy Industries and Public Enterprises.
Ministry of Power

Group 7:

Ministry of Consumer Affairs, Food and Public Distribution
Ministry of Corporate Affairs
Ministry of Housing and Urban Poverty Alleviation
Ministry of Human Resources Development
Ministry of Law and Justice
Ministry of Minority Affairs
Ministry of Overseas Indian Affairs
Ministry of Statistics and Programme Implementation
Ministry of Textiles
Ministry of Urban Development

Group 8:

Ministry of Defence
Ministry of Development of North Eastern Region
Ministry of Home Affairs
Ministry of Tribal Affairs
Ministry of Panchayati Raj
Ministry of Parliamentary Affairs
Ministry of Social Justice and Empowerment

For further details, you may visit VSC’s website, www.vsc-india.org.

All the CVOs are requested to give this wide publicity to the Awards in the organization and send the nominations, positively by 31.03.2009.

Yours sincerely,

(N.V. Raja Shekar)
President

To all CVOs

TWELVE WAYS TO UNITE TO COMBAT CLIMATE CHANGE- UNEP

1. Make a commitment

Reducing your carbon footprint is no different from any other task. Telling people you will reduce carbon emissions may seem simplistic, but even simple actions like announcing your commitment to going carbon neutral can be effective, while the simple act of asking for ideas can lead to creative and innovative solutions. Several countries have indicated in recent months that they will go carbon neutral, led by Costa Rica, New Zealand and Norway. The United Nations system itself, led by Secretary-General Ban ki-Moon, and guided by the UNEP-led Environment Management Group, is moving towards carbon neutrality. UNEP is also facilitating carbon neutrality in all sectors and all regions through its climate neutral network.

2. Assess where you stand

It is likely that carbon will eventually be judged as an atmospheric pollutant and regulated accordingly, with consequent costs—and opportunities—for all sectors of society. Knowing where and how you generate greenhouse gases is the first step to reducing them. For individuals and small businesses, online calculators and internal assessments can help start the process. Larger organisations may need specialised advice and tools, such as the new ISO 14064 standard for greenhouse gas accounting and verification, or the Greenhouse Gas Protocol, provided by the World Resources Institute and World Business Council for Sustainable Development, which is an accounting tool for government and business managers to understand, quantify, manage and report greenhouse gas emissions.

3. Decide and plan where you want to go

Based on your assessment of climate-related risks and opportunities, a strategy and action plan can be developed. Targets help focus efforts and also provide a benchmark for measuring success. Most homes or businesses can reduce energy use by 10 per cent—which almost always results in a 10 per cent reduction in greenhouse gas emissions—with a one year payback or less. A plan to reduce carbon emissions will first focus on the type of energy and the way it is used; for example electricity for buildings and fuel for transport. Reducing this energy can create instant savings. An effective tool is an energy audit. Many electric utilities and government energy offices now offer an audit as part of their efforts to reduce carbon emissions.

4. De-carbon your life

There is a broader way to think about carbon and climate. Everything an individual, organization, business or government does or uses embodies some form of carbon, either in products themselves or in the energy and materials it takes to make them. Buildings, fittings and equipment are all proxies for carbon; ‘carbon copies’ can be chosen based on the least amount of impact they will have on the climate. Integrating climate friendly criteria into decision making can trigger a ripple effect.

If consumers, manufacturers and lawmakers all think ‘low carbon’ and ‘climate friendly’ savings in carbon emissions will multiply. Take packaging as an example. US retail giant Wal-Mart worked with one of their toy suppliers to reduce packaging on just 16 items. The toy suppliers saved on packaging costs while Wal-Mart used 230 fewer shipping containers to distribute their products, saving about 356 barrels of oil and 1,300 trees. By broadening this initiative to 255 items, the company believes it can save 1,000 barrels of oil, 3,800 trees, and millions of dollars in transportation costs.

Another example: you can buy paper or wood products that adhere to internationally certified standards. The Forestry Stewardship Council (www.fsc.org), for example, is an international non-profit organisation promoting responsible management of the world’s forests. The FSC trademark is increasingly recognised as an international standard for responsible forest management. More than 90 million hectares in more than 70 countries have been certified according to FSC standards while several thousand products are produced using FSC certified wood and carrying the FSC trademark. Switching to recycled or sustainably sourced paper can also lead to considerable savings, reducing both landfill use and carbon emissions. Using recycled paper can save 1.4 tonnes of CO2 for every tonne of paper and cardboard.

Other ways of reducing your carbon footprint include wasting less time and energy on travel. Cities can improve public transport options, companies can encourage low carbon habits (by ceasing to subsidize parking or investing in hybrid technology company vehicles), and individuals can car pool or use public transport. Sometimes simple actions can produce a shift. Secure bicycle storage and changing and shower facilities, for example, are often inexpensive compared to other parking structures but create a strong incentive for those who can commute by bicycle. In larger cities with adequate public transport, a monthly or yearly pass can be offered instead of parking facilities. Paris and Vienna, for example, offer a public bicycle system that reduces greenhouse gas emissions and traffic congestion.

5. Get energy efficient

Improving the efficiency of your buildings, computers, cars and products is the fastest and most lucrative way to save money, energy and carbon emissions. This does not mean going without. Energy efficiency is about increasing productivity but doing more with less. More efficient buildings, cars and products will a direct and lasting contribution to limiting carbon emissions. Conventional buildings can account for almost 40 per cent of CO2 emissions. High performance, environmentally accountable, energy efficient and productive facilities are now economically possible.

Very simple measures can lead to immediate savings. Just turning off unused lights, motors, computers and heating can substantially reduce wasted energy—and money. Generally, laptop computers use less energy than desktop computers and LCD monitors use less energy than CRT screens. Also consider what to do with equipment when its useful life is finished. Some manufacturers offer take-back or recycling. Also look for energy efficiency standards. For appliances, the Energy Star rating is a way to describe efficiency. For many brands now, the highest energy efficiency rating does not cost any more than less efficient products. Originally from the United States, Energy Star is now applicable in Europe.

Think about your travel. Advanced web and video conferencing technology mean the time is rapidly approaching when the need to travel will be substantially diminished. A two-day trip to attend a meeting 1,000 km (600 miles) away can cost about US$2,000 per person when accommodation, travel and meals are included, while a video conference may cost as little as US$200. The savings are US$1,800 and about half a tonne of carbon. Telecommuting is also increasingly an option for many. A study by the Telework Coalition (www.telcoa.org) found that if 32 million Americans who could telecommute did so one day a week, they would drive 2 billion kilometres less, save 300 million litres of fuel and gain the equivalent of 32 million extra hours every week for leisure, family or work.

Lighting can account for 15-20 per cent of total electricity use. Converting coal at the power plant into incandescent light is only three per cent efficient. Compact fluorescent lights (CFLs) have evolved rapidly in the past decade. They now last between six and 15 years and reduce electricity use by a minimum of 75 per cent compared to a standard incandescent bulb. The advantages of CFLs and other high efficiency lighting have prompted legislation to ban incandescent bulbs. In 2007, Australia was the first country to mandate that no incandescent bulbs will be sold by 2012, a move that will reduce emissions by four million tonnes and cut power bills for lighting by up to 66 per cent.

6. Switch to low carbon energy

If possible, switch to energy sources that emit less carbon and can reduce costs and emissions. Generally, coal produces twice the emissions of gas, six times the amount of solar, 40 times the amount of wind and 200 times the amount from hydro. In many parts of the world customers can choose to have a percentage of their electricity supplied from a renewable energy source, such as a wind farm or landfill gas project. These ‘green choice’ programmes are maturing and proving to be a powerful stimulus for growth in renewable energy supply. Today, more than 50 per cent of all US consumers, for example, have an option to purchase some type of green power product.

Larger users can even build their own lower emission energy systems, using solar power or lower carbon technologies such as generators powered by natural gas. A Global Environment Facility project in eastern and southern Africa is promoting small scale hydro schemes in the tea industry and cogeneration using agricultural waste from the sugar industry to generate electricity for industry use and to feed into national grids. In the United Kingdom, the body background="images/backgrd.gif" Shop bought a 25 per cent stake in a large modern wind generator to provide renewable energy for its UK operations. Other companies installing their own renewable energy plant include 3M, DuPont, General Motors, IBM, Johnson & Johnson and Staples.

At the small business or household level, tax breaks and incentives can make solar photovoltaic systems and other renewable energy technologies cost effective. Rooftop solar electric panels can provide energy over time, reduce electricity costs and provide a buffer against price fluctuations. UNEP is helping promote such schemes in southern India and North Africa.

The transport sector is responsible for 25 per cent of total energy consumption and greenhouse gas emissions, mainly from burning petrol and diesel. Various options exist for kicking the carbon habit. Hybrid engines that combine electricity and conventional petrol or diesel engines can offer substantial fuel savings while reducing emissions. Vehicles can also run on a range of alternative fuels that can offer both cost and environmental benefits, although they also often require an additional investment that take some time to pay back. These include compressed natural gas (CNG), liquefied petroleum gas (LPG), liquefied natural gas (LNG) and biofuels.

Biodiesel and bioethanol are biofuels made from crops, such as wheat, soy, corn and sugar cane. They are often blended with petrol or diesel, and almost all vehicles can run on blends up to 10 per cent without modification. Specially enabled biofuel cars can run on higher blends, such as a mix of 85 per cent bioethanol and 15 per cent petrol. In many parts of the world, biofuels are becoming more popular and easier to find commercially and in various blends. For companies with automotive fleets, biofuels can be a cost-effective low-carbon alternative.

7. Invest in offsets and cleaner alternatives

There is a limit to how much efficiency you can squeeze from your lifestyle or your organisation’s operations, or how much renewable energy you can employ. The choice for those who wish to compensate for their remaining emissions is to fund an activity by another party that reduces emissions. This is commonly called a ‘carbon offset’ or ‘carbon credit’. The term carbon neutral includes the idea of neutralising emissions through supporting carbon savings elsewhere.

The average price for carbon offsets is US$15 per tonne, but costs range from US$5-50 per tonne. To purchase offsets, individuals or businesses pay an offset company to implement and manage projects that avoid, reduce or absorb greenhouse gases. Climate change is a global problem, so carbon reductions will have the same impact no matter where they are implemented. Carbon credits can be generated by emission-free energy generation, reduced demand, including energy efficiency, or sequestration in the form of underground and forestry storage.

According to one report, the highest quality offsets are generated from the flaring of methane from landfills, since methane is an even more potent greenhouse gas than CO2. Green Gas International (www.greengas.net) is a company that generates carbon credits by converting waste gas to clean energy through partnerships with mines, landfills and biogas producers. The worldwide benefits of such projects include 125 megawatts (MW) of power, saving four million tonnes of CO2.

8. Get efficient

Looking at your life or business through a carbon neutral lens can help you in other ways by increasing the efficiency of resource use, avoiding and reducing waste and ultimately improving your overall performance and reputation. Economists are fond of saying that there are no banknotes lying around because someone will have already picked them up. In climate change, there are still plenty of banknotes just waiting to be picked up. After all, carbon is generally the waste product of producing energy, and reducing waste and becoming more efficient is always a good idea. Integrate the 3R approach—reduce, reuse and recycle—into your thinking.

9. Offer—or buy—low carbon products and services

The market for climate friendly products and services is growing rapidly, from energy efficient products to new renewable energy systems. To offer such products, however, it’s important to begin at the design stage. Actions as simple as adding energy efficient specifications into the design process, for example, can produce a design that minimises energy consumption during its use and saves customers the time and energy from making adjustments to a product after a purchase, (for example having to wrap water heaters with insulation blankets).

A more systematic approach comes from the field of ‘design for sustainability’, which includes life cycle design and environmentally conscious design and manufacturing. This new approach considers environmental aspects at all stages of development to create products with the lowest environmental impact throughout the product life cycle. Ecodesign is an important strategy for small and medium sized companies both in developed and developing countries to improve the environmental performance of their products, reduce waste and improve their competitive position on the market.

10. Buy green, sell green

The market for green products and services is growing rapidly. In many countries consumer surveys report that growing numbers of consumers are willing to buy green products if given the choice. For businesses, innovative product design and presentation combined with responsible marketing and communications can help ensure that this consumer interest translates into purchasing. However, the market for green products remains underdeveloped because people still find it difficult to locate products or trust their environmental claims. Businesses can help consumers to be more climate friendly, from the online click for carbon offsetting on a tourism booking website to the label on a product at the local store.

11. Team up

Many private sector companies are increasingly working with non-governmental organisations, cities or governments to identify and implement best practice solutions to reduce emissions. The Carbon Disclosure Project (www.cdproject.net), for example is an independent non-profit organisation providing information for institutional investors with a combined US$41 trillion of assets under management. On their behalf, CDP seeks information on the business risks and opportunities presented by climate change and greenhouse gas emissions data from more than 2,000 of the world’s largest companies.

Similarly, local and national governments are seeking opportunities to partner with business on delivering low carbon solutions. In countries such as Canada, government institutions and power utilities supported the setting up of Energy Service Companies (ESCos). In the United States, the federal Environmental Protection Agency started the Energy Star program (www.energystar.gov) in 1992 as a voluntary partnership to reduce greenhouse gas emissions through increased energy efficiency. In 2006, American businesses and consumers saved US$14 billion on energy bills with the help of Energy Star saved and reduced greenhouse gas emissions equal to 25 million vehicles annually.

12. Talk

The increasing importance of climate change means that companies and organisations will need to communicate. Transparency is critical. The internet and other new media mean that companies, organisations and governments cannot hide behind greenwash. This is where tools for verification and reporting guidelines with recognised indicators are critical. One example is the Global Reporting Initiative (GRI) (www.globalreporting.org). Internal communications via intranets and company publications can report progress and acknowledge contributions by individual staff or teams. It’s also important to let shareholders know. Reducing emissions, particularly by improving efficiency is a win-win situation that can also enhance a company’s reputation. Consumers and investors alike are requesting information on a company’s response to risks and opportunities related to climate change.

(This is an abridged and adapted version of an original piece produced by UNEP for the UNEP/Sustainable Development International publication ‘Climate Action’ www.climateactionprogramme.org)

India’s new pension system redefines scale

By Jame DiBiasio | 16 February 2009

India is poised to launch an innovative pension system on an unprecedented scale. After many years of languishing in bureaucratic limbo, the so-called New Pension System (NPS) is now set to go live on April 1, having just completed an eight-week flurry of activity to establish operational procedures and select fund managers.

The NPS is aimed at catering to the nearly 400 million people in India's 'unorganised' sector of small- to medium-sized enterprises and cottage industries.

It originated as a scheme for central government employees, with the intention of expanding to the private unorganised sector. Last year the Pension Fund and Retirement Development Authority (PFRDA), the system's regulator, handed out three mandates for this role, to three government-owned fund managers, LIC Mutual Fund, State Bank of India Asset Management and UTI, based on recommendations forwarded by Crisil, a local ratings agency. These mandates are mainly fixed income; they allow the managers to invest up to 15% in equities but so far none has come close to that cap.

Because the NPS is only mandatory for newly joining civil servants, the size outsourced to these three managers is modest, and they will be paid 3-5bps on managed assets.

September saw another opening of the pensions world, when the Employee Provident Funds Office, which manages around $25 billion on behalf of the organised sector (the larger corporations), for the first time outsourced assets to four fund houses: HSBC Asset Management, ICICI Prudential Asset Management, Reliance Capital and SBI. Collectively these houses will receive $2-3 billion annually to run domestic bond portfolios.

But the biggest, most anticipated move has been the extension of the NPS from just covering new civil servants to the entirety of the unorganised sector. This had been held up for years because the Marxist parties that had provided the ruling Congress Party with support in parliament had opposed this. But in September the Marxists broke the alliance over India's nuclear deal with the United States, and Congress was able to reassemble a new ruling coalition with other parties.

With a general election scheduled for this spring, the PFRDA's chairman D. Swarup realised he had a short window of opportunity to get the NPS expansion through parliament and into action. The PFRDA appointed Mercer to assist it with designing the plan for the unorganised sector in December and unveiled the results this month.

The designers appear to have come up with a truly innovative design that is intended to maximise benefits to members, rather than enrich product providers. The 'new' NPS is structured around three tiers. First is the Central Recordkeeping Agency (CRA), which manages the system and is responsible for collecting contributions and disbursing benefits.

Beneath this is a myriad of Points of Presence (PoPs), in other words, distributors. Although entities such as the post office were considered, the designers for now have opted to stick with commercial banks and life insurance companies. An additional level of independent financial advisors has likewise been scrapped over concerns about their ability to understand or sell the NPS. So for now, the PoPs -- mainly the state-owned banks -- will serve as the front line.

The CRA is now in the process of finalising its choice of external fund managers who will handle all assets for members from the unorganised sector. It has made offers to six providers for three-year contracts, and it is assumed these six will accept, although negotiations are not over. The six include three government-owned entities (ICICI Life Insurance, SBI and UTI) and three private players (IDFC Asset Management, Kotak Asset Management and Reliance Capital). By law managers to the system cannot have more than 26% foreign ownership, which has automatically excluded foreign players such as Franklin Templeton and HSBC Asset Management, and most joint ventures as well.

These will manage two portfolios of indexed equities, two of fixed income, and two of corporate bonds and other credit instruments -- all domestic, for now. These will serve as building blocks to which members can allocate any mix of assets. (Government employees in NPS will also be able to choose from among these six managers, in addition to the three balanced mandates already chosen for them; but not vice versa, i.e. private-sector workers will not have access to portfolios chosen explicitly for civil servants.)

One of the most progressive features of the NPS is its default option for anyone who doesn't want to pick among funds, which is a lifecycle option. The CRA will allocate on member's behalf among the six funds, with an equities component ranging from 80% to 10%, adjusting accounts each year by the member's age.

If the scale of the unorganised sector is vast, consider the flip side: the razor-thin fees on offer. UTI put in the lowest bid, at 0.09 basis points -- yes, that's nine-hundredths of a basis point, and it includes transaction and custody costs. The CRA is now locking down the same fee among the other five managers. (In the cash market, an equity index fund sells for 100bps, and an actively managed fund for 200bps.)

"This cost structure is as close to a true index as you can get," says Hansi Mehrotra, Mumbai-based principal and business leader for investment consulting at Mercer.

For these fund managers, the eventual promise of servicing the vast unorganised sector is worth writing off the next three years. They already charge tiny fees for regular saving plans to their mutual funds. They have the existing IT, management and other resources already in place. Because the equity funds are passive, there is little call on portfolio managers.

And the biggest expense in asset management, the marketing, has been taken out of fund managers' hands. The PFRDA insisted on the CRA being responsible for all marketing efforts, in order to defend against mis-selling.

The PFRDA is also concerned about mis-selling at the PoP level. There is nothing to prevent an adviser at, say, State Bank of India from suggesting a member put all of their contributions into the fund run by SBI Asset Management. But at least it must obtain a signature from each member.

The biggest challenge will be making people aware of the NPS, and convincing them to contribute. Although mandatory for new civil servants, it is voluntary for private-sector workers. The CRA will begin marketing on April 1, once the system goes live, but it lacks a mechanism to reach the hundreds of millions who are eligible. The banks that will serve as PoPs don't have incentives to push the system, when it comes at the expense of their own deposit bases -- and besides, some 20% of these workers don't even have a bank account.

One big weakness in the system is the lack of tax incentives. Although plenty of workers in the unorganised sector pay no taxes, there could be rebates on things like excise taxes or custom duties, as well as corporate and income-tax breaks for those who qualify.

A second flaw is the requirement that nearly half the accumulated assets are to be used to buy an annuity from life insurance companies upon retirement. Although the annuity concept is good, doing so in this manner will subject members to the high prices of the cash market, undermining the benefits of ultra-low cost that the NPS's scale is meant to deliver.

There is now a bill in parliament that would address the tax issues, separate to the launch of the system, but fund management executives in Mumbai are sceptical it will be passed before the elections -- which means it is unlikely to be passed. Getting the NPS off the ground at all is a success and a coup for D. Swarup, but the system will require plenty of further reform.

The PFRDA says the system will attract only $2 billion per annum as a result of these problems -- a disappointment to fund executives, who had previously expected five or six times that amount. It will take fund houses 10 years or more to break even, says one funds exec, although the cutthroat fee schedules may be renegotiated in three years.

© Haymarket Media Limited. All rights reserved.

Timely prepration and proper maintenance of ACRs Dopt OM dated 16th Feb 2009