Financial Daily from THE HINDU group of publications
Friday, Jun 11, 2004
Govt mulls Rs 93-cr bail-out package for seamen PF
New Delhi , June 10
A Rs 92.78-crore bail-out package being considered by the Government for the gilts scam-tainted Seamen's Provident Fund (SPF) is expected to pave the way for amending the Seamen's Provident Fund Act, 1966, absolving the Government from the responsibility of the fund in future.
The fund is currently administered by a tripartite board of trustees comprising a Government-appointed Chairman, three nominees of the Central Government, three representatives from employers and three representatives of seamen.
The 2002 gilts scam had blown a hole in the Seamen's Provident Fund to the extent of Rs 92.78 crore in May 2002 due to non-delivery of physical securities by Home Trade.
A draft Cabinet note circulated in March, 2003 by the Shipping Ministry proposing to make good the loss suffered by the SPF did not find favour with the Finance Ministry.
"Before the rehabilitation package is considered, the restructuring of the fund should be done in such a way that, in future, the Government should not be perceived responsible for the working of the fund ", the Finance Ministry had said while disagreeing with the proposal of the Shipping Ministry.
Following the stand taken by the Finance Ministry, the Shipping Ministry has now re-worked the rehabilitation proposal seeking approval from the Cabinet to provide funds to the tune of Rs 92.78 crore as outright Government grant to recoup the shortage in the SPF with a rider that the Seamen's Provident Fund Act, 1966 would be amended to distance the Government from the responsibility of the fund in future, Shipping Ministry officials said.
"Under the SPF Act, 1966, the seamen have no choice but to keep the money in the fund. The seamen cannot be made to suffer the loss for no fault of theirs. The money lost belongs to the seamen and needs to be re-couped ", the official said.
The Seamen's Provident Fund Scheme, 1966, framed under the SPF Act, 1966, was introduced from July 1, 1964, to provide for the institution of a provident fund for all seamen. Every seamen employed on Articles of Agreement, unless excluded by the definition of a `Seamen' under the Act or exempted by a specific order as provided under the Act is compulsorily required to become a member of the scheme.
The fund aims to provide retirement benefits to seamen engaged in the shipping industry and their family members in the event of death. The SPF members get their own contribution of 12 per cent together with the employers' contribution of 12 per cent and interest thereon.
The Shipping and Surface Transport Minister, Mr T.R. Baalu, has urged the Finance Minister, Mr P. Chidambaram, to concur with his Ministry's proposal for re-couping the fund through an outright grant during a meeting between the two Ministers on June 8.
"The Shipping Minister has requested the Finance Minister to make necessary provisions in this regard in the Union Budget for 2004-05", the official said.
In the wake of misappropriation of funds in the SPF, the case was handed over to the CBI.
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