T.M. Sundararaman

Allowing status quo ante is in government's interest

FROM A recent news item it is seen that the Ministry of Finance proposes to hand over the Fund management of the Postal Life Insurance to the Postal Administration. To understand the predicament of the postal authorities in this regard, it is necessary to know about the Postal Life Insurance. When the foreign insurance companies operating in India in the 1880s were wary of insuring `native' lives (for want of data on mortality rates of Indians), the Postal Department started insurance business with aplomb only for its own officials initially. Slowly, it was extended to other government servants and till the mid-1970s it was exclusively for government servants and the maximum amount of insurance was Rs.50,000 only per individual life. Then the employees of government undertakings and the nationalised banks were made eligible to join the scheme. In absence of insurance agents as such and large establishment for propagating the insurance business, the Fund had been doing well and was able to offer comparatively lower premium and higher bonus. In LIC parlance, government servants are considered `first class lives' and for a certain extent of insurance, medical examination of such persons is done away with.

Exclusivity

When all the insurance companies were nationalised, PLI, which was being run by the government, was allowed to function as a separate entity because of its exclusivity in that it was available only to government servants. One can say with confidence that this is one of the best maintained schemes of the government because of its exclusivity and the efficient fund management by the Ministry of Finance. Extending the scheme to rural people does not seem to be a sound idea since the department does not have proper mortality figures of rural sections of the population and perhaps this has resulted in the present predicament of the Ministry of Finance washing its hands of the scheme. While the postal authorities did not have to worry about investment propositions but just concentrate on expansion of insurance business on sound principles all along, it is but natural that they are worried at the present development. Considering that the Ministry of Finance did not hesitate to take over the liabilities of the UTI when it floundered, it is incredible that it contemplates to give up the assets of the PLI, assiduously built over a period of 120 years. Inasmuch as the PLI scheme has been a pioneer institution for well over 120 years serving the interests of the government servants, without any extra load on the government finances, it behoves the government to have a rethink on the issue and allow status quo ante not only in the interests of the insurants of the PLI but also in the interest of the government itself, in view of the mushrooming of private players in the field. (The writer is a former Development Officer, PLI, Tamil Nadu Circle)

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