Financial Daily from THE HINDU group of publications
Saturday, Dec 11, 2004
Money & Banking
Scheme for Development Officers Govt not to interfere in LIC's decision
New Delhi , Dec. 10
THE Union Finance Minister, Mr P. Chidambaram, has ruled out interfering in Life Insurance Corporation's management decision pertaining to the Growth-Oriented Incentive Bonus Scheme for Development Officers.
"I am completely satisfied. The scheme has been arrived at after extensive discussions and negotiations and is a proper scheme. We are not interfering in the management decision of LIC," Mr Chidambaram said in Parliament on Friday.
The Minister was responding to a calling attention notice by Mr Chandrakant Khaire and Mr Basudeb Acharya in the Lok Sabha with regard to the situation arising out of implementation of various rules by LIC and General Insurance Corporation (GIC).
Since the members felt that the new bonus scheme had adversely affected the income, service condition and interest of development officers and field staff of the Corporations, they wanted to know the steps taken by the Government in this regard.
Mr Chidambaram said the Government wanted LIC to be strong and more competitive in the changed scenario of rapidly growing competition in the insurance sector. "An action plan is being chalked out by LIC to retain market share of 90 to 95 per cent," he said.
Concerned over the slide in new business by the LIC, Mr Chidambaram said the new scheme was aimed at boosting performance. Allaying apprehensions of the members over the problem faced by over 19,000 development officers, the Finance Minister said they were paid Rs 1,386 crore by way of salary, incentive bonus and conveyance allowance last year. This, he said, meant that, on an average, each officer received Rs 6.76 lakh. The highest earnings of a development officer were as much as Rs 1.23 crore, and 372 officers had earned more than Rs 10 lakh each.
In a written statement alongside, Mr Chidambaram said LIC's development officers are salaried employees. They receive, in addition to salary, incentive bonus, conveyance allowance, additional conveyance allowance and reimbursement of expenses depending upon the premium income brought in by the agents working under them.
The scheme of incentive bonus is formulated by LIC and is modified from time to time after due consultation with the persons concerned.
The LIC board, taking into account competition in the sector, approved the new Growth-Oriented Incentive Bonus Scheme. LIC has been losing its market share and unless effective steps are taken to regain it, it would stand the risk of losing its status as the dominant player in years to come.
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