One Rank One Pension (OROP) – Satyam Ev jayate
(Will Truth Prevail?)
Some one who has the ears, eyes and trust, mark the word, trust, some where in the byzantine maze of South and North Blocks, must be laughing about the briefs prepared for the Raksha Mantri (RM) and Prime Minister (Pradhan Mantri, Pradhan Sevak and, of course, Pradhan Santri) on OROP and recalling Thomas A Edison’s words, “I have not failed. I've just found 10,000 ways that won't work.” How else can the learned RM read out on OROP something prepared by ‘someone’ on 5th and, more seriously, the notes for the PM’s ex-tempore public address on 6th September 2015 contain factual errors (gaffe for us lesser Indians)?
OROP – The Origin
The first fact those ‘some one’ did not disclose to the RM & also the PM is that the OROP issue first came to the conscious knowledge of the Public, the Governments, and Ex-Servicemen (ESM) not 68 years ago (in 1947), not 42 years ago (in 1973), but actually 35 years ago (in 1980-81) when the Estimates Committee on Resettlement of ESM noticed the disparity in pensions of pensioners of Armed Forces retiring in different Central Pay Commission (CPC) regimes.
Then a torturous process of righting the wrong started.
In 1984, Shri K P Singh Deo, the MoS, MoD (Congress Government), chaired a High Level Empowered Committee, which recommended that the 4th CPC should consider the matter in line with the principle of pensions of Judges of the High Courts and the Supreme Court. The 4th CPC did not make any observation or recommendation.
It was followed in 1991 when a High Level Empowered Committee headed by then RM (Congress Govt) Shri Sharad Pawar did not recommend OROP but recommended a one time increase for ORs, JCOs, Honorary Commissioned Officers, and Officers below the rank of Colonels and equivalents.
In 1994-97, the 5th CPC considered OROP but did not recommend it but the CPC did recommend full parity for personnel who had retired before 1986 and notional parity for those who retired after 1986.
It was followed by, in 2003 when the first BJP Govt constituted an Inter-Ministerial Committee, serviced by Deptt of Pensions and Pensioners Welfare (DP & PW). The Committee submitted its report in Sep 2004 (UPA-I Govt) but the Ministry of Finance rejected (déjà vu?) it stating that it was not in consonance with the 5th CPC recommendations and termed it as “a side door entry” for OROP.
From 2005 to 2011, OROP was rejected by or not decided upon by different Ministries and Committees of Secretaries till on 19th December 2011, the Bhagat Singh Koshiyari Committee recommended OROP and even defined OROP.
After the Koshiyari Committee came the Prime Minister constituted Cabinet Secretary Committee in July 2012, which submitted its report in August 2012 that OROP is not viable, financially, administratively or legally and recommended passing the OROP baby and the hot water to the 7th Central Pay Commission to consider it “holistically.”
However, perhaps driven by the oratory of the PM-Candidate and the frenzy that ensued, the UPA Govt declared its intent of implemented OROP in the Interim Budget 2014-15.
Assessment by the Koshiyari Committee and…..
Let us now walk across the figures that ubiquitous ‘some one’ supplied to the Prime Minister, which he mentioned in his speech on 6th September 2015.
The estimated financial impact of implementing OROP was estimated by the Koshiyari Committee was Rs 1300 crore if implemented in 2011-12 (Para 11 of the Report) and not Rs 300 crore. The Koshiyari Committee recommended Rs 1300 crore in 2011-12, and the breakdown as Rs 1065 crore for PBOR pensioners and Rs 235 crore for officer pensioners. The Committee also estimated that outlay for OROP would increase at 10% annually , so contrary to what the esteemed FM states, the annual increase is not the figment of greedy imaginations of ESM but a fact recommended by a Parliamentary Committee.
In Para 11.1, the Committee noted and recorded “it is heartening to note that the Govt has ….spent Rs 2200 crore for the purpose of meeting the grievance of defence pensioners. The net result is that while the demand for OROP stands almost met in the case of PBOR, the officers’ category remains much behind the target…” This also substantiates the enhancement/improvement in pensions on 17th January 2013!
A prior reading of the observations by the Committee at Para 11 would have been very illuminating for those who prepared the notes for the PM, the RM and, those Cassandras who advance the bogey of others demanding OROP or India facing a problem like Greece. But that Greece bit is for another day.
…..Only Rs 500 crore set aside by the UPA
The third fact omitted by that ubiquitous ‘some one’ is that speeches and pitch of the ‘candidate for PM’ starting from September 2013, might have compelled the UPA Govt to open the OROP box by including it in the Interim Budget statement on the floor of Lok Sabha on 17th February 2014, and setting aside Rs 500 crore Interim Budget 2014-15.
Omitted from the notes for the PM was the truth that UPA’s Defence Minister and the Finance Minister (FM) stated that “Rs 500 crore was just a token amount and more would be forthcoming as soon as the amount could be worked out.”
This also was reiterated by then Defence Minister in his letter to Shri Rajeev Chandrasekar vide MoD ID No. 12(1)/2014-D (Pen/Pol) dated 26th February 2014.
It appears that the Prime Minister was not informed/reminded by that ‘some one’ that Shri Jaitley, our learned FM in the NDA/BJP Govt, went one better, setting aside an additional Rs 1000 crore for OROP and the reading of the Budget (indiabudget.nic.in/ub2015-16/eb/sbe22.pdf). May be the Gujarat cadre loaded PMO did not understand the Dilli durbar to ask relevant questions when preparing notes for the PM’s speech of 6th September 2015.
Or, may be, the revelation would have taken the sheen off UPA bashing!
Definition of OROP & Methodology for implementation
Curiously, the ID of 26th February 2014 also contained the definition of OROP. This definition was reproduced verbatim by the RM in his preface to the “Yes, we have given OROP” speech on 5th September 2015.
To take the OROP forward, Shri A K Antony constituted a Joint Working Group (JWG) about two months (24th April 2014 to be exact) after the announcement in the Interim Budget 2014, even beseeching the CGDA to be “considerate.”
The chairperson of the JWG was then CGDA, later promoted to Secretary & Financial Adviser in the MoD. Members of the JWG were from the MoD’s Deptt of Ex-Servicemen Welfare, Defence/Finance, and representatives from Service HQ (Chairmen of the Army, Navy and Air Force Pay Commission Cells and a few officers). But there was no representation from ESM organisations, though they could be consulted if Service HQ so decided, as stated in the ibid ID.
The first meeting of the JWG was convened on 2nd May 2014 in the office of the CGDA, recorded by the O/o CGDA that “As future enhancements have to be automatically passed on to the pensioners, Services proposal for incremental increase in pension on 1st July every year shall be considered.”
Chairman of Pay & Remuneration Committee (PARC) and also Chairman, Naval Pay Commission cell, being the senior-most from the Services at that meeting, scored out, repeat scored out the words incremental increase in pension on 1st July every year, shall” and substituted with “annual revision of OROP tables should be considered.”
In his Action Taken report (on the Budget of 2014-15) and in the Budget speech of 28th February 2015, Shri Jaitley reported having held a meeting with the Defence Secretary, Secretary (ESW), Secretary (Defence/Finance), and CGDA on the implementation of OROP on 26th August 2014. He added, “The modalities are under consideration” (source: indiabudget.nic.in). Curiously again, neither the Services HQ nor the ESM were part of the confabulations. They could have contributed facts and figures that now place the Government in a different light than “I love the Army men, so….” oratory.
A dispassionate but intelligent perusal of calculations by Service HQ would have shown that up to the rank of Major (and equivalents) that are in service will have lower pay in April 2014 than, say, April 2007. Similarly, in higher ranks there is no guarantee that a Colonel with 28 years service in Apr 2014 will draw a lower pay and pension than a Colonel in the 28th year completed in Apr 2015 or Apr 2016, simply due to the fact of higher fixation to the 2014 retiree in January 2006.
Why the Annual Revision of OROP tables
A perusal of the Koshiyari Committee Report brings out some aspects that will give a more rounded, and less strident, demand and rejection of the Annual or even a Bi-Annual Revision.
At Para 6.4 of the Report, the Army’s representative agrees that a 5 yearly review is agreeable. At Para 6.5 of the Report the Air Force’s representative concurs with this 5 yearly review. At Para 6.6 of the Report, the Navy’s representative is silent.
At Para 7 of the Report one will see a more comprehensive statement from the Deptt of Expenditure (MoF).
The DoE places the initial estimate in 2011-12 at Rs 1300 crore and projects a 10% annual increase to Rs 1430 crore in 2012-13, Rs 1573 crore in 2013-14, Rs 1730 crore in 2014-15, Rs 1903 crore in 2015-16 and a 25% increase to Rs 2379 crore in 2016-17 due to the 7th Pay Commission’s recommendations.
At Para 8 the DP & PW projects the demands from others but is silent on the estimate while the Cabinet Secretariat projects an amount of Rs 8000 crore to Rs 9000 crore.
In fact most cells in the OROP tables in the Draft Government Letter (DGL) prepared by Service HQ in April 2014 would not have changed every year except for cases like the following: -
Firstly, Col/Nb Sub/Hav ‘A’, with 30 years service, whose birth date is 15 June will retire on 30th June 2015 and be denied an increment of 3% which falls due on 1st July every year. Col/Nb Sub/Hav ‘B’, also with 30 years service, but whose birth date is 7th July will retire on 31st July 2015 and get an increment of 3% and therefore a higher pension.
Shouldn’t Col/Nb Sub/Hav ‘A’ also get the same pension as Col/Nb Sub/Hav ‘B’, both having served for 30 years and retired just a month apart in year 2015? It will not happen to others who might retire after 1st July 2015 because they will be in receipt of the increment.
Secondly, on 16th December 2004, the Ajai Vikram Singh Committee recommendations were implemented and time frames for promotions up to the rank of Colonel were reduced drastically. But there were promotees with 18 years of service who were promoted to rank of Major or Lt Col before 15th December 2004. Their pensions will be to be rationalised because an officer with lesser number of years of service cannot, by the Govt’s Fundamental Rules, draw more pay than an officer with higher years of service. This is also the crux of the Apex Court’s judgment in Maj Gen S P S Vains (retd) Vs UoI.
Thirdly, a sepoy is paid Rs 7065 as pension if he has service between 20 and 27 years. But a sepoy who serves 27.5 years (a rarity) is paid a pension of Rs 7175. Shouldn’t the pension tables be rationalised so that all with 27 years of service draw the same pension and the next slab should be at 28 years instead of the half year?
What would be the financial effect? Would we have a Greece like situation as some trolls, and even a learned managing editor of a financial periodical state?
The financial effect was calculated to be about Rs 185 crore in the first year and would reduce every subsequent year because all pensioners would reach the top of the pension table in 5 years, if the 7th CPC did not change the methodology!
Any one with the Higher Secondary School standard of knowledge of computers would have correctly briefed the Defence Minister (an IIT alumni) and the PM who has dealt with many a budget in his 12 years as CM of Gujarat.
And the VRS Issue
This aspect was never discussed openly nor disclosed (for a Govt that maintains transparency as one of its virtues). Any knowledgeable persons amongst 125 crore Indians, let alone the RM, would be chagrined that the Armed Forces do not have VRS i.e a Golden Handshake where a lump sum is given and matter is closed.
The some one who prepared the brief/notes would have been more anxious that the RM & PM should not be told about nor read the Defence Services Regulations 2008, Army Pensions Rules – 2008, for only then, in an otherwise moment of generosity, the RM let Mr Scrooge prevail by denying OROP to those personnel (about 40% to 50%) who have opted out on PR from Service.
Defence Services Regulations, Army Pension Rules, Chapter VII, Section 5 define the types of pensions (pensions on PR are not mentioned) and Section 9 gives the legal status for withholding, suspending or discontinuing pensions. It can only be because, while in service the Serviceman committed an act construed as waging war against the Government of India or of a conspiracy to wage war against the Government of India and punishable under Section 121 of the IPC.
Didn’t the Chiefs or the Defence Secretary, who had places at the high table, know? Or just like on 26th August 2014, the Chiefs were kept in the dark till that dark hour of 3 pm on 05 Sep 2015
Finally, if the PR personnel are denied OROP, then the Prime Minister would deny OROP to between 40% and 50% of ESM and to many whose wives would be widowed in subsequent years.
By denying OROP to PR personnel, the financial impact, first time and subsequent, will be half of Rs 8300 crore or Rs 10000 crore or Rs 12000 crore.
In conclusion the Prime Minister has kept his word to implement OROP. But some one in his Government has found the myriad ways to ensure OROP as defined by the Koshiyari Committee and approved by Parliament in March 2014 and July 2015 will not work.
Therefore, it is difficult not to recall the words of Thomas A. Edison, “I have not failed. I've just found 10,000 ways that won't work.” Will those words be carved on the tombstone of this Government’s commitment to OROP?
Satyam Ev Jayate?