Monday, September 14, 2015
Across the aisle: The OROP whodunit
The other mystery story running on our screens is One Rank One Pension (OROP).
Actually, there is no mystery. All the facts are recorded and documented. However, in the race to claim credit (and disown criticism), the OROP issue is being presented as a big controversy shrouded in mystery.
Get facts right
Let’s get the facts right. The Indian Armed Forces are voluntary forces. There is no conscription. Men and women join the forces as jawans or officers for a variety of reasons and, among them, is the security of a job. While the job is reasonably secure, it is not a job for the entire working life. According to the report of the Koshiyari Committee, 85% of the Armed Forces personnel retire by the age of 38 years and another 10% retire by the age of 46 years. They have to work for a living for many more years, but there is no guarantee of a post-retirement job.
Retirement at an early age is good and necessary to keep the forces young and fighting fit. Hence the case for an honourable pension.
There is another reason to make pension an attractive term of service that has not been noticed adequately: it is to attract new volunteers. The attrition rates, and the vacancy levels, are alarmingly high and, if the Armed Forces have to remain voluntary forces, recruitment must remain robust. The promise of an honourable pension is an important factor in recruitment.
OROP is an honourable pension. The time to debate the merits and demerits of OROP is over. It was a decision taken by the UPA government and reiterated by the NDA government. Both may share credit.
Some more undisputed facts: While presenting the interim budget for 2014-15 on 17 February, 2014, I had said: “During the tenure of the UPA governments, changes in the pension rules applicable to the defence services were notified on three occasions in 2006, 2010 and 2013. As a result, the gap between pre-2006 retirees and post-2006 retirees has been closed in four ranks (subject to some anomalies that are being addressed): Havildar, Naib Subedar, Subedar and Subedar Major….. Government has therefore decided to walk the last mile and close the gap for all retirees in all ranks. I am happy to announce that government has accepted the principle of One Rank One Pension for the defence forces.”
What is OROP?
On 26 February, 2014, the ministry of defence defined OROP and the following definition was communicated to the chiefs of the three services: “OROP implies that uniform pension be paid to the Armed Forces personnel retiring in the same rank with the same length of service irrespective of their date of retirement and any future enhancement in the rates of pension to be automatically passed on to the past pensioners. This implies bridging the gap between the rate of pension of the current pensioners and the past pensioners, and also future enhancements in the rate of pension to be automatically passed on to the past pensioners.”
It was a four-page, 12-paragraph letter that left no doubt on what was intended to be done. The conditions, modalities and the manner of implementation were spelt out in detail. On 22 April, 2014, a Working Group was constituted with the Controller General of Defence Accounts as the chairperson with Terms of Reference that included “to work out the detailed financial implications.” It was specifically stated that “since substantial increase is anticipated in expenditure on OROP, FA (DS) would thereafter seek additional funds as per requirement.”
Much is made of the fact that the interim budget provided only Rs 500 crore. It was, as I had said, an estimate and the money was provided as “an earnest of the UPA government’s commitment.” Mr Arun Jaitley reaffirmed the commitment in his Budget Speech on 10 July 2014. And, pray, how much did he provide? He said, “we propose to set aside a further sum of Rs 1,000 crore to meet this year’s requirement”!
So, why is the government adding ifs and buts? Why is the government adding unacceptable riders or conditions that will dilute the “commitment” of two successive governments?
Reject the objections
The sticking points are entirely due to bureaucratic back-pedalling and the inability of the government to overrule the objections. The promise must prevail over the objections, even if some of them appear valid. The promise was to implement OROP from 1 April, 2014, and not 1 July, 2014. The promise was same pension to personnel retiring in the same rank with the same length of service, and not grant of same pension by looking into the cause of retirement. The promise was that future enhancements in the rate of pension will be automatically passed on to the past pensioners, and not that the adjustment will be made every five years.
OROP is indeed a defined benefit pension and different from the National Pension System (NPS) which is a contributory pension scheme. A person who has a short working life in the Armed Services cannot contribute enough during that period to earn an honourable pension. Hence OROP.
Whatever it takes to implement OROP, the resources must be found. In 2010-11, the RBI transferred to government a surplus of Rs 15,009 crore. Who thought RBI would transfer Rs 65,896 crore in 2015-16? If there is will, a way can be found.