This refers to Debashis Basu's column "Stock market riches for the poor" (Irrational Choice, March 9). The writer's suggestion to set up an exclusive scheme that would invest in equities is quite rational and welcome. However, the suggestion that the task can be entrusted to one of the top mutual funds in the country is beset with difficulties associated with government orders. The government cannot simply select the top fund. It has to call for tenders to prevent the attribution of bias in selection. There is no guarantee that the best top funds would be able to get the scheme on merit. Otherwise, the government should simply outsource the scheme to one of the top mutual funds. How far this can be accommodated within the government's rules and regulations is anybody's guess.
In this country, even if the government wants to do something good, it has to pass the rigorous test of public scrutiny and should conform to the canons of public policy. When the government ventures to conform these norms, there is no guarantee that a mutual fund that has the knowledge and track record of reasonable returns would bag the contract. Even the Employees' Provident Fund Organisation, which has a huge corpus, is unable to invest a fraction of its corpus in equities since its investment fund managers do not have the expertise. There is vehement opposition for investing in equities from trade unions. They have supported smaller guaranteed returns than the attractive uncertain higher returns.
K V Rao, Bengaluru
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