”That will be a decidedly regressive move both for our commitment to fiscal responsibility, and more broadly for the credibility of our reforms,” former RBI governor D Subbarao
New Delhi:
The decision of some states to restart Old Pension Scheme will be decidedly a regressive move and will provide more privilege to government servants at the cost of larger public, majority of which has no social safety net, former RBI governor D Subbarao has said.
Under Old Pension Scheme (OPS), employees get a defined pension. An employee is entitled for a 50 per cent amount of the last drawn salary as pension.
OPS was discontinued by the NDA government in 2003 with effect from April 1, 2004.
”That will be a decidedly regressive move both for our commitment to fiscal responsibility, and more broadly for the credibility of our reforms,” Subbarao told PTI.
Under the new pension scheme(NPS), employees contribute 10 per cent of their basic salary towards pension while the government contributes 14 per cent.
”In a country where the large majority of the people have no social safety net, government servants with an assured pension are a privileged lot. Privileging them even further at the cost of the larger public will be morally wrong and fiscally detrimental,” he said.
According to Subbarao, if state governments revert to a ‘pay as you go’ pension scheme, the burden of pensions will fall on current revenues which in turn means foregoing schools, hospitals, roads and irrigation.
Governments of Rajasthan, Chhattisgarh and Jharkhand have informed the central government/ Pension Fund Regulatory and Development Authority (PFRDA) about their decision to restart OPS for their employees.
The government of Punjab on November 18, 2022 issued a notification regarding implementation of OPS for the state government employees who are being covered under NPS. Jharkhand too has decided to revert to OPS.