While presenting his second budget, Finance Minister Dr Haseeb A Drabu Monday termed management of Provident Fund of employees as ‘Ponzi Scheme’ and revealed that “government has been utilizing the net accruals on account of Provident Fund as captive resources to finance its day to day expenditure.”
Elaborating he said that “net GPF was grossly understated in the budget so as to get a higher allocation of market borrowings. This fiscal hara-kiri has been committed year after year for the last 30 years or so.”
Drabu termed the “incorrect budgetary practice” has resulted in the total liability of Rs 14,058 crore as on March 22, 2016, which he says is “completely un-provided for.” He further said that “the same procedure has been followed for State Life Insurance Scheme for government employees for which the liability is another Rs 588 crore.”
He assured employees that the government will overhaul the PF accounting system and will address the issue.