Wednesday, August 19, 2015

OROP - Arithmetic, Technicalities, Resource Crunch & More Bunkum

One Rank One Pension has been misinterpreted by many to give a distorted picture of what exactly the Ex-Servicemen (20 lakh of them) and the widows (6 lakh of them) of ESM are raising their voices and resorting to means that normally are not their methods of drawing attention to grievances and seeking redressal.

What is OROP? Simply defined by the Parliamentary Committee headed by BJP MP Koshyiari is that an ex-serviceman of one rank (say Havildar) with similar years of service (say 20 years) should draw the same amount of Pension (say Rs 11000 per month) whether he retired from the Army in 1973 (3rd Pay Commission) or 1986 (4th Pay Commission) or 1996 (5th Pay Commission) as the one drawing pension (say Rs 13500) if he retired after 1.1.2006 (6th Pay Commission).

         Now debunking some myths/distortions of truth

Distortion 1: OROP is not in the terms and conditions of service for defence forces when they opted to enrol.

Facts: -Who decides the terms and conditions?

Obviously, the Government of India.

Was OROP decided by the Govt of India?

Obviously Yes again. The UPA Govt declared OROP in the Parliament and included in the interim budget 2014-15. The BJP led NDA Govt reiterated OROP in the Budget 2014-15. Therefore, there is Govt sanctity for OROP and the consequent change in terms and conditions.

    Ex-Bureaucrats may wish to refresh their minds that Non-Functional Upgradation (NFU) was by Govt approval but not in their terms and conditions of service before 2009. Many bureaucrats are drawing NFU without qualms because it is now in their terms and conditions of service.

Distortion 2: - OROP will balloon in subsequent years and the State cannot bear the cost.

Facts: - Defence Pension budget includes the pensions of Defence civilians.

Secondly, if any one cared to look at the PCDA (Pensions) website and circulars 500 and 502, they would have seen tables of pension for each rank commencing at 15 years of service and attaining a plateau at 28 and above years of service. It will be the same in OROP.

The above example of the Havildar (or any other ESM of any other rank and years of service) would show that even with a 3% annual increment, he will attain the top of the table and thereafter financial effect will be ZERO.

Thirdly, Rs 8300 crore (of which Rs 6500 crore will be for Other Ranks) may be applicable only to those who have not yet reached the ceiling and in year 2015-16, the 3% increase may be over Rs 8590 crore not Rs 20, 000 crore or Rs 22, 000 crore.

Our learned FM is reported to have stated that OROP of Rs 8300 crore cannot be paid because of “resource crunch.” ESM are aghast that such economy with the truth hides some truths: - Revenue foregone i.e gifted away, is to the tune of Rs 5.89 lakh crore in 2014-15 crores (nearly seven thousand times the OROP), the Public Sector Banks have been “re-capitalised” (bailed out from their bad decisions to lend to those who will not return the loans) to the extent of Rs 20, 000 crore (250% the amount required for OROP). Where is the resource crunch?  

Distortion No. 3: Arithmetic and Technicalities.

Facts: - Arithmetic first. How did the tables in PCDA (P) Circulars 500 and 502 come about? Some formula was used and pensions were enhanced and improved in Jan 2013. So the same formula with a bit of tweaking would produce the OROP tables without any complex arithmetic.

Technicalities would be sorted out by a wise person by looking at payments by CGDA/Naval Pay office/AFCAO in 2013-2014 and a ready-made solution would be obvious if a similarly ranked ESM with similar years of service drawing as pension from 1.4.2014 is compared to those to whom Circulars 500 and 502 are applicable.

Finally, Distortion No 4: - For those who preach patience (“you waited so many years in the UPA”),

Facts: - Please do not conveniently forget that after 1973 when the OROP had its genesis, we have had the Janata, the United Front, the Atal Vajpayee Governments too who prevaricated when it came to decide on OROP.

Secondly, it is unfair and unjust to equate their political leaning against the ESM requesting the “we have a majority Govt” to tell them a “will implement OROP by date” without asking themselves why they need annual increases for doing the same job.  

The legal Aspects and the “No Documents available Bunkum”

        Every other day I have read in newspapers and magazines that some Gujarat cadre officer has been inducted into the Prime Minister’s office or as heads of some statutory and constitutional organisations. As the Chief Executive, the PM has the last word of who will work with him but I wish to place some facts for perusal.

        One Rank One Pension (OROP) was a nascent thought when Shri Narendra Modi, then the PM-candidate gave it strength in a gathering of Ex-Servicemen (ESM) in 2013 by turning it into a commitment which probably accelerated the process for the UPA government to announce it in Parliament and include it in the interim budget on 17 Feb 2014.

How to tackle the Arithmetic & Technicality

       The consternation that Shri Modi caused was, perhaps, also at the root of Shri A K Antony’s uncharacteristic speedy decision to constitute a Joint Working Group (JWG) immediately thereafter, chaired by the Controller General of Defence Accounts (CGDA), an Additional Secretary level officer, with members from the Services, the MoD & its financial advisory arm, the Defence (Finance), etc. The JWG acted with some alacrity – meeting from 24th April 2014 onwards and had its last meeting on 12th June 2014 in the form of a presentation to Shri Arun Jaitley, then the Defence as well as Finance Minister.

     It is a moot point that the JWG would not have made a presentation to the Minister unless it had formalised all aspects of the OROP – the methodology, the arithmetic, the technicalities, maybe even the legal aspects, given that the Minister is a legal luminary.

The CGDA or the FADS (Financial Adviser, Defence Services, who earlier was the CGDA and chair of the JWG) adopted some methodology and recommended that an outgo of Rs 8329 crore would meet the requirement of OROP in 2015. If one believes the Defence Minister, and there is no reason to disbelieve a Union Minister, then he has approved the amount (consequently the arithmetic) and the methodology (consequently the technicalities) before sending the file to the almighty and omnipotent MoF.  

One may recollect that the UPA Govt decided, in furtherance of the recommendations made by a Cabinet Secretary headed Committee in August 2012, to enhance and/or improve the pensions of retired Officers, JCOs and ORs. The action was that following the methodology in place, the MoD and MoF with the assistance of CGDA and PCDA (Pensions) issued two circulars (No. 500 and 502) to give effect to its decisions.     

Legal Precedents for OROP

As for the legal aspects, please read the judgements of the Honourable Supreme Court, by a 5 Judge bench in the first case: -

In the D S Nakara Vs UoI decided on 17th December 1982 by a 5 Judge Bench: -

“….. In the instant case, looking to the goals for the attainment of which pension is paid and the welfare State proposed to be set up in the light of the Directive Principles of State Policy and Preamble to the Constitution, it indisputable that pensioners for payment of pension form a class. When the State considered it necessary to liberalise the pension scheme in order to augment social security in old age to government servants it could not grant the benefits of liberalisation only to those who retired subsequent to the specified date and deny the same to those who had retired prior to that date. The division which classified the pensioners into two classes on the basis of the specified date was devoid of any rational principle and was both arbitrary and unprincipled being unrelated to the object sought to be achieved by grant of liberalised pension and the guarantee of equal treatment contained in Art. 14 was violated inasmuch as the pension rules which were statutory in character meted out differential and discriminatory treatment to equals in the matter of computation of pension from the dates specified in the impugned memoranda.”

In the UoI Vs Maj Gen S P S Vains case decided on 9th September 2008

“30. However, before we give such directions we must also observe that the submissions advanced on behalf of the Union of India cannot be accepted in view of the decision in D.S. Nakara's case (supra). The object sought to be achieved was not to create a class within a class, but to ensure that the benefits of pension were made available to all persons of the same class equally. To hold otherwise would cause violence to the provisions of Article 14 of the Constitution. It could not also have been the intention of the authorities to equate the pension payable to officers of two different ranks by resorting to the step up principle envisaged in the Fundamental Rules in a manner where the other officers belonging to the same cadre would be receiving a higher pension.”

And finally in UoI Vs Maj Gen S P S Vains case on 16th February 2015-08-18

“Heard.

Ms. Pinky Anand, learned Additional Solicitor General, prays for and is granted three months' time finally to work out the modalities for implementation of the one rank-one pension principle on which the Tribunal has passed the impugned judgment. The principle is also, it appears, covered by the decision of this Court in Union of India & Anr. v. SPS Vains (Retd.) & Ors - (2008) 9 SCC 125. Post after three months finally. We make it clear that no further time will be granted for the purpose of implementation of the impugned judgment.”

And the "No Documents" Bunkum

General Financial Rules 2005 (as amended) in Appendix 13, Annx 1 state very clearly that all financial documentation must be preserved for 5 years after the death of a pensioner, and in case Family pension is paid, then for 5 years after the death of the family pensioner. This was the same and silly excuse trotted out by the MoD & CGDA in the Rank Pay Case but a few requests under the RTI Act, 2005 elicited prompt replies that documents are available but are preserved in manual form i.e they have not been loaded on computers!

So, whether it was desperate and failed election ploy of UPA-II or the unthinking bravado of the present Government, it is pay up time.
 

2 comments:

  1. They are unable match length of service , rank & service in the last rank by one formula.But o think this has much simpler solutions only when veterans & Govt officials sit across the table to discuss & decide--------Service pension should be applied by number of years of service & Rank pay should added to service pension to arrive at basic pension. Other elements added to basic ( like Grade pay, MSP, X Gp , NPA,Flg pay etc )This resolves the problem OROP as well as Senior getting less than Junior.Enhancement of service to compensate early retirement should also be actuated (no notional) by extending the table of increments to encompass the whole period.

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