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One Rank One Pension – OROP is getting final Shape

One Rank One Pension – OROP is getting final Shape – Large provision to be made in the Budget 2015

Achchey Din seems likely to dawn on the armed forces, or ex-personnel in particular. The government is giving final shape to their long standing demand of adopting One-Rank One-Pension (OROP).

Bureaucrats are currently burning midnight oil to pore over the fine print of at least four options to implement the OROP scheme. A source in government, aware of the developments, says a decision is expected soon and a large provision in the Budget, or soon after.

“We are very hopeful that the long overdue injustice to the armed forces will be reversed in this budget,” says Maj Gen Satbir Singh (Retd) who leads the IESM or Indian Ex-Servicemen Movement, which lobbied intensely for OROP since 2008. “Both UPA and NDA have agreed to our OROP so we see no reason that it will be held back now,” he says.

For 40 years the retirees, now numbering three million, have been bristling under what they perceive as “neglect and humiliation” by political parties and successive governments. Its extreme manifestation, from their perspective, was the denial of OROP. Lack of empirical data on the cost of this pension, plus political reluctance of the parties fuelled much of the denial and delay. The former military staff launched public agitations to make their case, often embarrassing the government.

Must Read : Check all these links below to get developments in OROP so far:

Regardless of which of the four options the government decides upon ultimately, the roughly Rs 8,000 crore likely to be set aside for OROP should go a long way to calm the angry (wo)men in uniform, besides providing them a lifestyle befitting the status, say, one that a retired colonel or brigadier enjoys.

One choice before the government, says the same government source, is to do exactly as the ex-servicemen want: Give future and past retirees of the same rank from the Army, Navy and Air Force exactly the same pension. Essentially, this means that all Brigadiers or, say, Air Vice Marshals, would get the same pension regardless of when they retired, taking into account only their years in service and the number of years they held the rank. This formula, a literal interpretation of the phrase One-Rank One-Pension, has been accepted by government committees, including the Parliamentary Standing Committee on defence.

For instance, a colonel with 30-32 years of service, whose basic pay was around Rs. 26,000 before 2004 would have earned around Rs. 37,000 in 2014. OROP is expected to bridge the pension gap that arises due to this pay discrepancy. “Our demand is very simple: Today’s pension for all previous retirees,” says Singh.

But the government’s estimates of cost of this pension have it pedalling back a little. Taking 2012 as the cut-off date, giving past retirees hikes that bring them on par with the highest pension paid to that rank in 2012, would cost a whopping Rs 16,000 crore, they argue. This has prompted a hunt for other options, meant to “balance” the exchequer with meeting armed force expectations.

A second option involves fixing the pension for pre-2006 retirees according to the 6th Pay Commission. Then, the government may pull a trick out of its hat and select the lowest pension paid since 2006 as the norm for older retirees. A version of this formula is already under implementation for Junior Commissioned Officers, Non-Commissioned Officers, and other ranks. It’s possible this formula, with some tweaks, will be accepted, and result in the roughly Rs 8,000 crore allocation.

“It’s obvious OROP is going to happen,” says this government official. The discussions, this person says, is now in its final stage. There was a third choice, which involved bringing all ex-servicemen on par with the basic pay of the 6th Pay Commission, then calculate each retiree’s pension individually, taking into account each one’s years in service and length of time spent in the rank. This option is an “administrative nightmare” dogged, reportedly, by unavailable past data with the Controller of Defence Accounts, a wing of the ministry of defence. The lack of data is also a clear sign that the OROP debate has been based on weak databases and much groping in the dark.

A fourth and final option is where pension is to be fixed on the basis of an average or median. Separate groups of retirees who superannuated in bands of years, say, between 1990 and 2000, would be made. Those earning a pension below the average would get an enhanced pension, while the rest would be protected. This option, apparently easy to implement, is technically not OROP at all as it implies a different pension for retirees in the same rank, if they retired at different points of time.

The defence forces are mounting tremendous pressure on the government to ensure OROP isn’t watered down. Earlier this month, they questioned defence minister Manohar Parrikar for saying that OROP would satisfy them “80 per cent.” Their vociferous protest had the government assure full satisfaction. In 2009, angry retired armed personnel signed a petition in their own blood for then President Pratibha Patil. Reeling under such tough tactics, the UPA finally accepted OROP in 2012. But the Rs. 500 crore for it in last year’s interim budget presented by finance minister P Chidambaram was seen as woefully inadequate. The veterans switched sides, now pinning their hopes on to the BJP’s then prime minister-aspirant, Narendra Modi.

Five lakh ex-servicemen had assembled last spring at Rewari, on the outskirts of Delhi, to hear Modi promise OROP, should his party form the government. Behind the scenes, the ex-servicemen had already got an assurance from the party to consider their demand and publicly announce it, as a precondition for pulling in the spectacular crowd in Rewari. “For years we had requested, protested and demanded OROP. In 2014 we realised what would make a difference to politicians—votes. With our strength and influence over the village population, we could swing elections in many places,” Gen (retd) Singh says.

OROP is an issue which could trip the BJP. It considers and projects itself as a fiercely nationalist party, a narrative meaningless without a robust national defence policy. It can scarcely afford to disappoint the defence forces. Nevertheless, the different versions of OROP indicate just how conflicted the issue is. The ex-servicemen never agreed that OROP will cost the Rs. 16000 predicted by the bureaucracy. They still hope for a Rs. 9000-12000 crore allocation for full OROP. The usually docile military retirees started getting heated up only after 2006. That year, the Sixth Pay Commission hiked central government pay significantly, to counter the private sector’s fantastic offers to the similarly educated. As pension is always a proportion of salary, after this hike, the gap between pensions of ex-servicemen who retired before and after 2006 grew wider. Most jawans retire in their mid-thirties, and only an eighth of officers rise beyond the rank of colonel. The belief that the army would never catch up with the civil services’ benefits also grew.

“There has been an obvious and clear neglect of our concerns vis a vis civil services,” says Col. Karan Kharb (Retd.), who recently wrote in several journals about rising expressions of discontent within the Army. “One of the biggest reasons for discontent is not implementing OROP.” He says that the promotion pyramid, even after reforms since the mid-2000s, is so narrow that officers promoted to higher ranks often don’t get deployed in that rank’s position. “We need a motivator. The government must see to it that the armed forces are looked after exceptionally well, not just in comparison with the civil servants,” he says.

Since 1951, the army argues, it has clambered down five steps in rank status, compared with the police and civil services. For instance, an SP was equivalent of a Captain in the army at the time, a joint secretary a major. Now, a joint secretary matches a major general and an SP a colonel. “We are not asking for money, the pension is simply a corollary to our pride being restored,” says Cdr SS Ahuja, (Retd) from the Indian Navy.

Other than the three million already-retired personnel, some 60,000 retire from military service every year fuelling speculation in the bureaucracy of an unmanageable financial liability, and that OROP will encourage other para-military formations to raise similar demands. “There is a perception among the armed forces that India is not treating them with due respect. Given the parallel perception that the forces are critical to India’s security, this debate has arrived at a juncture where some concrete step will have to be taken,” says Prof Mukul Asher, a professor specialising in social security issues in Asia at the Lee Kuan Yew School of Public Policy, Singapore.

Asher says pension appears to be taken as a separate item, with nobody examining the total cost of an employee in the armed forces, including after retirement. The “peculiarity” of adjusting pensions against pay commissions makes the system even more complex, he says.

Indeed, Gen Singh (Retd) and his IESM colleagues trace their mistreatment back to the 3rd Pay Commission in 1973. That year, for the first time, civilian and military salaries were “clubbed”. Until 1973, civilian pension was 33 per cent of last salary drawn. Officers, at the time, drew 50 per cent of their last salary as pension while Jawans or Junior Commissioned Officers got 70 per cent. After 1973, civilian pension grew to 50 per cent of last pay drawn, while retired jawans and JCOs pension was cut to 50 per cent.

To illustrate, the pension of the highest civilian authority was Rs. 416.50 in 1973 and increased to Rs. 45000 in 2006. The army chief in 1973 was entitled to Rs. 1000 pension, which is now Rs. 45000. “So, the civil services have given themselves a 108 per cent hike over these years and given us only 45 per cent. Why? Who gave them this authority?” says Gen. Singh.

Since 2004, most new government employees, though not armed forces, moved to a new system where pension contributions are defined and not benefits. “Pensions to existing retirees cannot be changed but this does not mean that in future some new employment contract cannot be drawn up. This is the kind of decision that needs to be taken,” says Asher.

For now, nobody really seems to know what OROP should, or will, cost and the call seems to depend on immediate affordability rather than long term considerations. As the government official says, the payout in the budget will be a political decision for the Modi government.

Source: Outlook India

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