This refers to the report ‘NPS: Central govt staff may get more investment flexibility’ (November 23). The New Pension Scheme (later called the National Pension System) was introduced in December 2003, prospectively for central government employees joining service from January 1, 2004. For those affected, it was “substitution of existing defined benefit pension scheme by something very similar to contributory provident fund with no guaranteed return”.

There is no evidence to show that the shift was done after any study about the social security aspect. The primary ground for denial of pension benefits for ‘future’ employees was the unfunded pension liability of the Centre which exceeded ₹3 lakh crore in 2003. The ‘Pay As You Go’ method of meeting pension liability was being adversely commented on. The Centre refused to start funding pension liabilities. NPS was excluded from the terms of reference of the Sixth Pay Commission.

In 2006-07, ING Group and IIM-Bangalore jointly researched pension systems in India; its findings are published in Facing the Future: Indian Pension Systems . This document did not find any takers in PFRDA or the Centre.

The Seventh Pay Commission has listed several concerns and made recommendations including one for upward revision of employer’s contribution. The NPS is in a real mess.

MG Warrier

Mumbai

Firm on credibility

The recommendations made by global consultancy Alvarez and Marsal on bankruptcy law are noteworthy. The average time taken for insolvency proceedings in India is about 4.3 years which is high compared to other member countries. While there is no comprehensive and integrated policy on bankruptcy in India there are three major legislative acts and several provisions which provide procedural guidance on liquidation or reorganisation.

Therefore four different agencies — High Court, Company Law Board, BIFR, and DRTs — have overlapping jurisdiction which may create systemic delays and complexities in the process.

A strong bankruptcy law would also help banks tackle the problem of stressed assets.

So the draft report submitted by the Bankruptcy Law Reform Committee to the finance minister is a positive step. The viability of an enterprise must be examined by a host of people such as stakeholders, creditors, shareholders, and promoters.

In order to avoid litigation which causes delay and deterioration of value of assets, a provision may be included to levy fines in case of frivolous adjournments.

TSN Rao

Bhimavaram, Andhra Pradesh

Refund investors

Sovereign Gold Bond investors have subscribed at the rate of ₹2684 a gram of gold whereas the market rate was ₹2548 when the issue closed. Instead of providing incentive to investors to attract subscription, the government has made a hole in the investors’ kitty. The government must arrange to allot the bonds by taking only ₹2548 and refund the balance amount to show its credibility.

S Kalyanasundaram

Email

Crying over spilt milk

With reference to the editorial, ‘After the deluge’ (November 23), we as a nation are very poor in preparing for disasters.

Chennai cannot take refuge under the pretext that the city is normally drought affected.

There have been at least five instances of heavy rains leading to floods in Chennai during the last 40 years. The government should take remedial and preventive measures on a long-term basis.

Vinay Kapur

Chennai

Erratum

b The article titled ‘ULIPs for protection and wealth’ by Sandeep Batra (November 23) was edited in a manner that altered the views of the author in a couple of places and introduced some others that he does not endorse. For instance, Mr Batra did not imply that equities are the best asset class and did not make any comparison between ULIPs and other financial savings instruments. The edited article is withdrawn and replaced with the original on our website. The errors are deeply regretted.

LETTERS TO THE EDITOR Send your letters by email to bleditor@thehindu.co.in or by post to ‘Letters to the Editor’, The Hindu Business Line, Kasturi Buildings, 859-860, Anna Salai, Chennai 600002.

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