Business News Desk, The decision of some states to revive the Old Pension Scheme (OPS) would definitely be a retrograde step. This was said by former RBI governor D Subbarao. He also said that OPS will give privileges to government employees at the cost of common people, while most common people do not have any special social security. Under OPS the employees get a fixed pension. An employee is entitled to receive 50 per cent of his last drawn pay as pension.
Old pension discontinued from 1st April 2004
The NDA government had decided to discontinue the OPS with effect from April 1, 2004. “This would certainly be a retrograde step both in terms of our commitment to fiscal responsibility and the credibility of our reforms,” Subbarao said. Under the New Pension Scheme (NPS), employees contribute 10 per cent of their basic salary, while the government contributes 14 per cent. “In a country where most people have no social security, government employees with fixed pensions are the privileged few,” he said.
…burden of pension will fall on existing revenue
Subbarao said that if the state governments revert to the old pension scheme, then the burden of pension will fall on the existing revenue. That is, less allocation for schools, hospitals, roads and irrigation. The governments of Rajasthan, Chhattisgarh and Jharkhand have decided to reintroduce OPS for their employees. He has told this to the Central Government / Pension Fund Regulatory and Development Authority (PFRDA).
Apart from this, Punjab and Himachal Pradesh have also taken steps towards returning to OPS. On India’s widening current account deficit (CAD), Subbarao said there were some concerns earlier this year. But the pressure has eased in the last few months. This is due to softening commodity prices, which have declined by about 15 per cent from their highs, he added.