Saturday, March 2nd, 2024

Populist politics heavy on the treasury! Why is the new pension scheme becoming a big political issue in many states?

Responding to the decision of some states to revert to the old pension scheme (OPS) on January 6, former Planning Commission chief Montek Singh Ahluwalia said, “I certainly share the view that this move is absurd and leads to financial bankruptcy.” is a step taken towards

Today we will talk about something old which has been made new again by politics. India’s old pension system was abolished in 2004. But it is being revived for 2024. By the way, this demand is very old and the protest is very old. But now the opposition is making this demand the basis of its victory. Responding to the decision of some states to revert to the old pension scheme (OPS) on January 6, former Planning Commission chief Montek Singh Ahluwalia said, “I certainly share the view that this move is absurd and leads to financial bankruptcy.” Ahluwalia was the deputy chairman of the Planning Commission of India when the Congress-led UPA government brought out a new pension scheme in 2004. Interestingly, the two states that went back to OPS, Chhattisgarh and Rajasthan, had Congress Chief Minister. Also, the third state to do so is Jharkhand, where the grand old party is part of the ruling coalition. Himachal Pradesh, on the other hand, where the Congress got a rare electoral victory in December, is also moving to replace the OPS. The chorus for reinstatement is growing even in BJP-ruled states like Madhya Pradesh and Karnataka.


OPS assures a fixed pension of 50 per cent of the last drawn pay of the employee. However, the plan is not subject to tax. OPS was discontinued on April 1, 2004 and was replaced by NPS. Since 2004 government employees are following NPS which contributes to taxation. The new scheme provides a retirement pension fund that is 60 per cent tax-free on redemption, with the remaining 40 per cent to be invested in 100 per cent taxable annuities.


In Karnataka, three MLAs, including Ayanur Manjunath and S V Sankanur and Marithibegowda, walked out of the Legislative Council, expressing displeasure over not yielding a favorable outcome to the OPS discussion held in the House recently. The discussion took place in response to a question that came in the wake of the ongoing protest at Bengaluru’s Freedom Park by several government employees who demanded that they be covered by OPS. The legislators asked the state-ruled BJP government to ensure that the NPS is at par with the old one. According to him, the current pension was not sufficient for many retired government employees. As per information, Karnataka Chief Minister Basavaraj Bommai has considered the petition of government employees on the basis of “financial condition of the state”.

Tamil Nadu

The Joint Action Committee of Teachers Association-Government Employees Organization (JACTO-GEO), during a demonstration held in front of the Kanyakumari Collectorate, said that if the state government led by Chief Minister MK Stalin refused to fulfill their demand for revival of OPS So the teachers and government employees will “abandon” the Dravida Munnetra Kazhagam (DMK) in the upcoming elections. , According to him, after coming to power, Stalin forgot his promise to revive OPS in Tamil Nadu. Over 1,000 teachers and government employees protested against the DMK government.

center stand

It is rare for Congress-led state governments to oppose a scheme launched by the UPA government in 2004. At the same time, the support of the same scheme by the NDA government is also unique in itself. This is because the Center has to refund the money deposited by the employees who were under NPS. The Parliamentary Standing Committee headed by BJP MLA Jayant Sinha recently discussed issues related to OPS. Going back to OPS is financially dangerous, according to financial experts. Underlining that Montek Singh Ahluwalia said that the biggest thing for those going ahead with this step is that bankruptcy will come after 10 years. Representatives of government think tank National Institute of Public Finance and Policy and the expenditure secretary will soon hold a round table discussion with a parliamentary panel on the issue of pension liabilities of the Center and states. The Reserve Bank of India and the Pension Fund Regulatory and Development Authority will also brief the panel.

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