Saturday, September 5, 2015

Modi government set to announce OROP with five-year reset clause

NEW DELHI: Looking to resolve a major bugbear that has defied resolution for decades, the Modi government is set to announce a one rank, one pension package for ex-armed forces personnel that will kick in from July 2014 and use 2013 as the base year for calculations. 

Though military veterans are insisting the pensions be revised at least once every two years, the government is determined to stick to its position on a five-year reset clause. The decision to opt for a five-year timeframe — as against 10 years for civilians — factors complications resulting from a quicker adjustment. The ex-servicemen had originally demanded an annual adjustment. 

The package is likely to be announced in the next two-three days and even though the ex-service personnel are still unwilling to accept a five year revision, the government hopes it will be able to close the debate on a long festering dispute that affects a key constituency and exposes it to political attacks. 


The pension for veterans of the same rank, and those who retire with full pensionable service, will be the average of the maximum and minimum paid. But to protect retired servicemen from losing out, there will be an additional safeguard to ensure that those who are already drawing above the average would not be impacted. 

Sources said the government is of the view that OROP should mean that ex-servicemen of the same rank and with the same years of service should receive the same pension, irrespective of the year of retirement. "The principle is that any increase in pension should result in a similar enhancement for someone who retired earlier to ensure that new and old pensioners are at the same level. This will be done through adjustments once every five years," an official said. 


The benefit of OROP would be available to war widows too but those who have opted for voluntary retirement would not be eligible. 

The government is planning to pay the arrears from July 2014 in four installments spread over two years. In case of widows, however, it would be cleared in one shot. Sources said implementing OROP would cost the government Rs 8,000-10,000 crore annually. For the current fiscal year, the government has budgeted for defence pension of Rs 54,500 crore. 

While the ex-servicemen are demanding that OROP should be implemented from April 2014, the government has opted for the July cut-off as the Modi administration took charge on May 26, 2014, an official explained. 

Given the complexities in dealing with the duration of service and when someone retired, the government is also expected to announce a one-member judicial panel that will submit its report in six months. 

Sources in the government said an issue that had been hanging fire for several years was resolved, at least for the moment. Although the UPA government had initially allocated only Rs 500 crore for OROP, the deal was sweetened after the PMO stepped in. Sources said the government took the view that there was a need to resolve the issue although it may put pressure on resources available with the Centre. 


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