30 July 2008

Exclusion from pension fund management - zero bids

If a news report is correct, two bidders (asset managers) for managing the pension portfolio have been excluded because they bid zero, apparently on a legal opinion that a zero bid is not contractually enforceable. This is legally sound, but in reality is highly redoubtable. The right thing to do, was as suggested by the bidders i.e. call them and ask them to bid Re. 1. It is precisely this kind of inequitable and mechanical thinking which causes huge losses to the government and pensioners alike. One basis point of Rs 1,55,561 crores is over Rs.15 crores by the way.

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