Discussion Paper: Could the OROP-2019 problem be resolved if Financial Advisor, Defence Services (FADS) is less passive

Discussion Paper: Could the OROP-2019 problem be resolved if Financial Advisor, Defence Services (FADS) is less passive

References:

  

A.        Duties of the Comptroller & Auditor General for India extracted from https://cag.gov.in/content/dpc-act-cags-duties-powers-and-conditions-service#chapter3

B.         Responsibilities of MoD (Fin)/FADS from https://cgda.nic.in/index.php?page=deffin

C.         OROP amounts from PCDA Circular No. 555 dated 04.2.2016.

           

D.        Revision of Pension of pre 1.1.2016 retirees: Para 5.1 of MoD F No. 17(01)/2016/D (Pension/Policy) dated 29 .10.2016.

E.        Concordance tables for Notional Pay based fixation of pension have been taken from MoD F No. 17(1)/2017(02)/D (Pension Policy) dated 17.10.2018 and PCDA (P) Circular No. 608 dated 26.10.2018 (Page 195 for Lt Col and Page 198 for Brig).

F.         Revision of Pension post 1.1.2016 retirees is based on methodology given in MoD F No. 17(02)/2016/D (Pension/Policy) dated 04.9.2017.

G.        24 years QS for Lt Col and 28 years QS for Brig and related pension figures are taken from the tables provided by O/o CGDA in UO No. 5699/AT-P/OROP/Vol IX dated 23.08.2018.

H.        Duties of CGDA from https://cgda.nic.in/index.php?page=abtdad

Introduction

The Comptroller & Auditor General (C & AG) has, inter alia, this responsibility:

13. It shall be the duty of the Comptroller and Auditor-General-

1.   to audit all expenditure from the Consolidated Fund of India and of each State and of each Union territory having a Legislative Assembly and to ascertain whether the moneys shown in the accounts as having been disbursed were legally available for and applicable to the service or purpose to which they have been applied or charged and whether the expenditure conforms to the authority which governs it;

2.   To audit all transactions of the Union and of the States relating to Contingency Funds and Public Accounts;

3.   To audit all trading, manufacturing, profit and loss accounts and balance-sheets and other subsidiary accounts kept in any department of the Union or of a State; and in each case to report on the expenditure, transactions or accounts so audited by him.

2.         In other words, the C & AG does not formulate methodology or modalities but audits whether expenditure conforms with the policies formulated by the ‘Authority which governs it.’ In contrast, the “Authority” i.e. MoD (Finance) appears to have surrendered the responsibility of formulating modalities and methodology viz. policy to a Department that works under it viz. CGDA. This is the subject of this hypothesis.

3.         The recommendations of Committee [also known as Joint Working Group (JWG)] headed by CGDA have not been placed in the Public domain till date through Section 4 of the RTI Act, 2005 makes it mandatory (“c. publish all relevant facts while formulating important policies or announcing the decisions which affect public” and “d. provide reasons for its administrative or quasi-judicial decisions to affected persons”).   Whether the CGDA overruled suggestions from the Defence Forces representatives and why it ignored recognised Ex-Servicemen’s Associations like the Indian Ex-Servicemen League (IESL), Naval Foundation, etc is not in the public domain.

4.         However, the then Raksha Mantri, Shri Manohar Parrikar (may his soul rest in peace), the modalities and methodology formulated by O/o CGDA (and acquiesced by MoD (Fin) in One Rank One Pension in 2014 (herein after referred to as OROP 2014) wisely saw that it would need adjudication by no less than a retired Chief Justice of a High Court for he may have known from the files that: -

(a)        Finance Minister of India was misled in 2014 by O/o CGDA’s erroneous calculations that Rs 500 crore would be adequate for meeting OROP and that is what he announced the Parliament in the Interim Budget 2014. Probably, the file notings would reveal that this Rs 500 crore estimate given by O/o CGDA is the truth. That the final expenditure on OROP was in excess of Rs 7000 crore is a matter of (inconvenient) fact.

(b)        The definition adopted by the Govt in respect of OROP-14 was stated in Para 2 of MoD letter No. 12(1)/2014/D (Pension/Policy) dated 07.11.2015 as, “uniform pension to be paid to Defence Forces Personnel retiring in the same rank with the same length of service regardless of their date of retirement, which implies bridging the gap between the pension of current and past pensioners at periodic intervals.”  

(c)        However, whether the modalities proposed by O/o CGDA and acquiesced by MoD (Fin) have resulted in the contradiction of the definition in Para 3 (iii) which stated, inter alia, “Pension for those drawing above the average shall be protected.”

(d)        It is widespread speculation, purely because the minutes of the meetings of the JWG were NEVER placed in the public domain), that the above modalities were proposed by then CGDA and Service HQ were not part of the decision making or their opinions were disregarded.

5.         Perhaps the Chief Justice’s One Man Judicial Committee (OMJC) report contains so many mistakes by MoD that MoD’s SAG grade officers who were in the Internal Committee cannot/has not submitted a report and, worse, now the report is not even being considered will be buried in MoD, probably because it might bring to the public domain the fragility of the modalities, methodology that resulted in two types of OROP – 14 viz. the average Pension and the (many) higher than average pension(s).

6.         Hegel, a German philosopher said, “We learn from history that we never learn from history.” MoD’s proposal for a CGDA headed Committee (Committee – 2019 for brevity) with a similar composition as the original committee for OROP-14  has been approved by the incumbent RM on 13.09.2019 with a time line of one month [note 17 on file No. 1(1)/2019/D (P/P)].

7.         Three months have passed and the report has not been submitted as on 31.12.2019. However, file notings on the ibid file reveal that O/o CGDA has requested for at least three months extension (emphasis supplied) as of October 2019 (ibid file). Therefore, if bound by precedent, the CGDA dictates the modalities and methodology for revision of OROP, the new committee might not have any original thought process, unless the FADS (now an IA&AS officer) decides to take the responsibility to exercise “Authority” which is, inter alia, “the examination of the proposal on its merits; assessment of the financial effect and if the proposal is accepted, the careful examination and vetting of the final orders before issue. Sometimes two or more of these stages are combined, but all proposals having a financial bearing inevitably follow through this process. This procedure ensures not only close and adequate control by Finance, but also enables them to give constructive suggestions and advice from the financial point of view at a fairly early stage of the consideration of a proposal” and leave the O/o CGDA to carry out its responsibility of audit instead of policy making (emphasis supplied).

8.         Further, though honourable PM is cleansing up “sins committed over 70 years, ” his intent does not appear to have arrived at the doorstep of O/o CGDA as proved by the following among many other instances where the O/o CGDA has been proved wrong: -

(a)        In UoI Vs Major Dhanapalan (Original Petition No. 2448 of 1996 and Writ Appeal No. 518 of 1998 in the honourable High Court of Kerala at Ernakulam and SLP (C) 5908 of 2005 in the honourable Supreme Court of India (File No. B/25511/AKDP/AG/PS-3 refers), where then CDA decided to deduct Rank Pay before re-fixing pay in the 4^th CPC.

(b)        In UoI Vs Lt Col N K Nair & Others in Transfer Petition (Civil) No. 56 of 2007 (judgment of honourable Supreme Court on 08.3.2010) and Interlocutory Application No. 9 of 2010 in TP (C) No. 56 of 2007 which was argued by the Learned Solicitor General of India (judgment of honourable Supreme Court on 04.9.2012). The O/o CGDA raised a clutch of objections in complying with the orders of the honourable Court vide Annexure C to UO No. AT/I/1483-Army/X (PC)/III dated 12.10.2012 [Opinions of the Learned Solicitor General of 15.10.2012 that the case was not fit to file a Review Petition as the IA was in itself a prayer for review of the Court’s order of 3.10.2012 and of Learned Attorney General dated 03.9.2013 vide MLJ No. AG QW/2013-ADV. ‘C” DT. 14.08.2013 & AG Dy. No. 325/AG/OPIN DT 14.8.2013  may be referred to]. The Court’s decision was finally implemented by an order of July 2014, after every avenue had been explored to (exhausting) limits.

   

(c)        In UoI Vs Maj Gen SPS Vains and Others (OA 100/2010 in AFT Chandigarh) and Civil Appeal No. 5566 of 2008 in the honourable Supreme Court of India.

(d)        In another instance, when the 6^th CPC (where an IDAS Officer was in the Secretariat) placed officers of the ranks of Lt Col to Lt Gen in pay band of Rs 37400-67000, with different Grade pay but MSP only for Brigadiers and below, the Ministry of Finance (Implementation Cell) M/o Finance, D/o Expenditure vide U.O. No. 2674/JS (Per) dated 11.10.2008) raised a query whether Lt Col to Brigs will not get higher emoluments and therefore, higher pensions. However, the statement of O/o CGDA (vide CGDA’s UO No. AT/I/1496-II dated 20-10-2008) that “It is very unlikely that officers of the rank of Colonel and Brigadier would have such long residency periods in the respective ranks. In all probability they are likely to be promoted to higher ranks or retire on attaining the age of superannuation (emphasis supplied) proved grossly wrong but was not challenged by MoD (Fin).

(e)        Details of how the O/o CGDA arrived at the conclusions and intimated MoD was provided vide UO Note NO: AT/I/1496/XI dated 01/01/2018 in reply to CGDFA/R/2017/50707 dated 05/12/2017. However, as per disclosures in reply to CGDFA/R/2017/50280, that the following number of non AMC/ADC/RVC officers are drawing/have drawn pension/pay of Rs 80000 or more as on 31.12.2015:

(i)         PCDA (O) vide LW/SS/AT/RTI/45/Vol-V dated 19.9.2017: - Colonels:   124, each drawing Rs 81700 per month; Brigadiers: 113, each drawing Rs 81900 per month; 

(ii)        Naval Pay Office on mobile on 05.12.2017: Captain (IN): 12, each drawing Rs 81700 per month; Commodores: 17, each drawing Rs 81900 per month; 

(iii)       AFCAO through CPIO Air HQ vide Air HQ/23401/204/4/12206/E/PS dated 20.9.2017: - Group Captains: 13, each drawing Rs 81700 per month; Air Commodores: 24, each drawing Rs 81900 per month. 

(g)        The problem is because the O/o CGDA appears to have ignored the accelerated promotion time frames notified by the MoD vide No.2 (2)/US (L)/D(AIR-III)/04 dated 12 March, 2005 whereby  officers are granted higher ranks at lower years of service and age, leading to longer residual service in the higher ranks. The honourable Supreme Court order dated 15 Feb 2016 in Civil Appeal No. 3208 of 2015 (UoI & Others Vs Lt Col P K Choudhary & Others) explained the matter in great detail in the case of Officers of the Army.    

(h)        A similar problem (of officers of Levels 12A, 13 and 13A drawing more emoluments than officers in Levels 14 to 17) has occurred in the 7^th CPC (where the Chairman of the CPC lavished immense praise on an IDAS officer for his in-depth knowledge of pay related matters of Defence Force). At the behest of the Defence Forces, MoD drew the attention of MoF vide ID No. 1(6)/2016/D (Pay/Services) dated 16.8.2016 and pages 4 to 22 of MoD File No. 1(8)/2016/D (Pay/Services) but was de-linked with the approval of then RM (Para 4 of page 25 of ibid file refers).  

(j)         Concordance tables were prepared by O/o CGDA vide UO Note No.AT/I/1225/Pension/III (PC) dated 30.07.2018 (F No. 237/RTI/2014/D(P/P) – Part II dated 11.9.2018 in reply to DEXSW/R/2018/50684 dated 06.8.2018). File notings on F No. PC.17 (1)/2016/D (Pen/Pol) indicate that MoD (Fin/Pen) has not queried why no fitment into 7^th CPC Pay matrix + MSP, if any, with reduction to 50% of the Pay + MSP (for pension) has been given in the CGDA prepared tables in a similar manner as for civilian retirees in DoP&T OM No. 38/37/2016-P&PW)A) dated 06.7.2017 even though the ibid DoP&T letter has been quoted extensively.

(j)         As recent as 2018, an AAO in PCDA (O) raised a query whether MSP is to be reckoned for calculation of leave encashment. Though orders exist that MSP is taken into consideration for Death-cum-retirement gratuity (DCRG), the query has not be resolved by CGDA or the FADS and has been referred to Min of Fin, where it languishes on some desk.

 

9.         Now a reply vide F No. 237/RTI/2014/D(P/P) – Part III dated 11.12.2019 to First Appeal [No. DEXSW/A/2019/60140 dated 04 Nov 19] provided by Deputy Secretary, Deptt of Ex-Servicemen Welfare, MoD including notings and correspondence from file No. 1(1)/2019/D(Pen/Pol) and replies provided by CPIO and Under Secretary, DESW and Jt CGDA (Pension), O/o CGDA in reply to DEXSW/R/2019/50600 & CGDFA/R/2019/50380 respectively forwarding the latter’s reply shed some light.   

(a)        It is stated by the Jt CGDA (Pension) in a reply dated 05.4.2019 to MoD/DESW letter of ibid file reference dated 28.3.2019 on equalisation/revision of OROP, that the O/o CGDA had provided a sample survey stating that OROP x 2.57 is more than the pensions of those retired after 1.7.2014 (effective date of OROP) or 1.1.2016 (effective date of 7^th CPC). The tables provided a comparison of OROP pension for Lt Col with 24 years of service and Brigadier with 28 years of service and pension under 7^th CPC dispensation for officers with the same amount of service.

(b)        In No. 5699/AT-OROP/Vol XIX dated 26.8.2018, the table for Lt Col in Annexure B is re-produced below:

Part of table from O/o CGDA, Annexure B of UO No. 5699/AT-P/OROP/Vol IX dated 23.08.2018

1			Lt Colonel
2	Standard Qualifying Service		24
3	Pay (4th CPC)		Min Pay	Max Pay
4		Pay	3900	5100
5	Pension	4th CPC	2208	2772
6	Pension under 5th CPC under consolidation	w.e.f. 1.1.1996	5953 to 7286
7	Pension under modified parity 5th CPC	w.e.f. 1.1.1996	7093
	Range	01.01.96	7093 to 7286
8	Pension under 6th CPC by multiplication method	w.e.f. 1.1.2006	16032 to 16487
9	Pension under Modified Parity	w.e.f. 1.1.2006	26265
10	Revision under OROP	w.e.f.1.7.2014	32428
11	Revision in 7th CPC (Col 10 x 2.57	w.e.f 1.1.2016	83340
12	Revision if he had not been granted OROP (Col 9 x 2.57)	w.e.f. 1.1.2016	67502

Post 1.7.2014 & 1.1.2016 Retirees

Time period	Lt Col
	Total No. of pensioners with QS 24 years	Pensioners drawing less than OROP rate	% of pensioners drawing less than OROP
1.07.2014 to 31.12.2015	246	232	94.3
01.01.2016 onwards	514	401	78.02
Majority of Lt Col who have retired after 2014 are currently drawing less pension than OROP

 10.      Calculations of O/o CGDA appear to based on incorrect assumptions. The reasons are

(a)        Data provided does not take into consideration that all officers of the rank of Major & equivalents in the Navy and Air Force are promoted to rank of Lt Col on completion of 13 years of service. Re-computed data indicates that 50% of Basic Pay + MSP (Rs 162800+15500= Rs 178300) is Rs 89150 which is higher than the OROP x 2.57 = Rs 83340 indicated by the Jt CGDA (Pension).  

(b)        However, Notional Pay range indicated on Page 195 of PCDA (P) No. 608 for OROP Rs 32428 x 2 i.e Pay of Rs 64856 is Rs 63350 to 65250 and Pay is Rs 167700. Add MSP Rs 15500 = Rs 183200. So pension should be Rs 91600.  

11.       Further in Annexure B of UO No. 5699/AT-P/OROP/Vol IX dated 23.08.2018, the errors appear to have been repeated in the case of Brigadiers.

1			Brigadier
2	Standard Qualifying Service		28
3	Pay (4th CPC)		Min Pay	Max Pay
4		Pay	4950	5100
5	Pension	4th CPC	3075	3150
6	Pension under 5th CPC under consolidation	w.e.f. 1.1.1996	7993 to 8105
7	Pension under modified parity 5th CPC	w.e.f. 1.1.1996	9550
	Range	01.01.96	9550 to 9550 (?)
8	Pension under 6th CPC by multiplication method	w.e.f. 1.1.2006	21583
9	Pension under Modified Parity	w.e.f. 1.1.2006	29145
10	Revision under OROP	w.e.f.1.7.2014	36420
11	Revision in 7th CPC (Col 10 x 2.57	w.e.f 1.1.2016	93600
12	Revision if he had not been granted OROP (Col 9 x 2.57)	w.e.f. 1.1.2016	74903

Post 1.7.2014 & 1.1.2016 Retirees

Time period	Brigadier
	Total No. of pensioners with QS 28 years	Pensioners drawing less than OROP rate	% of pensioners drawing less than OROP
1.07.2014 to 31.12.2015	97	8	8.25
01.01.2016 onwards	239	1	0.42

12.       However, Notional Pay range indicated on Page 198 of PCDA (P) No. 608 for OROP Rs 36420 x 2 i.e Pay of Rs 72840 is Rs 70900 to 73030 and Pay is Rs 187700. Add MSP Rs 15500 = Rs 203200. So pension should be Rs 101600.   

Recommendations

13.       It is a prayer that the honourable RM may wish to seriously consider the following so as to avoid yet another series of avoidable speculation, agitation, and litigation:

(a)        First, CGDA is a Deptt of the DAD, which is under the MoD. The duties of DAD are specified as “Defence Accounts Department, with the Controller General of Defence Accounts at its head, functions under the administrative control of the Financial Adviser (Defence Services). The duties of the Defence Accounts Department are broadly audit, payment and accounting of all charges pertaining to the Armed Forces, including bills for supplies and services rendered and for construction/repair works, pay and allowances miscellaneous charges, pensions, etc” (source: https://cgda.nic.in/index.php?page=abtdad).

(b)        Therefore, it is incongruous that O/o CGDA is requested by the controlling head viz. FADS to formulate modalities and implementing methodology, which CGDA will subsequently audit. It is evident from numerous replies to RTI applications that MoD (Fin), headed by IDAS officers, does not formulate modalities or methodology or policy on Pay, Allowances or Pensions of Defence Services personnel but only issues concurrence after the proposals of CGDA (headed by IDAS officers) are approved by MoF.

(c)        In other Ministries, the methodology in respect of Pay, Allowances or Pensions is formulated by the Deptt of Personnel & Training, and vetted/approved by MoF (and MHA just needs to inform MoF). O/o Comptroller & Auditor General (C & AG) does not formulate policy/modalities/methodology by audits compliance of relevant orders.

11.       In interest of the welfare of the Defence Forces, which the honourable PM states so frequently from public platforms to be meaningful, the honourable Raksha Mantri may wish to re-constitute the Committee for OROP Revision 2019 in which CGDA or representative may be a member. Otherwise, the revision will suffer the same fate as the recommendations for OROP dated 7.11.2015 where there was an average pension and many protected higher pensions than the average for same rank and same years of service and the report of a retired Chief Justice of a High Court has been consigned to a dark corner of the MoD. 

Appendix

Part I

First

# Notional Pay range indicated on Page 195 of PCDA (P) No. 608 for OROP Rs 32428 x 2 i.e Pay of Rs 64856 is Rs 63350 to 65250 and Pay is Rs 167700. Add MSP Rs 15500 = Rs 183200. So pension should be Rs 91600.   

Second table

For source of information, please see Para 9 of the ibid letter and Notes below

Rank	QS	OROP from PCDA (P) Cir 555	OROP x 2.57	Pay in 7 CPC Pay matrix  Level 12A (Army Officers Pay (Amendment) Rules 2017	Add MSP to E	Total E+F	Pension in 7 CPC @ 50%
A	B	C	D	E	F	G	H
Lt Col	14	25211	64793	121200	15500	136700	68350
	15	25990	66794	124800	15500	140300	70150
	16	26385	67809	128500	15500	144000	72000
	17	26385	67809	132400	15500	149700	74850
	18	26385	67809	136400	15500	151900	75950
	19	26385	67809	140500	15500	156000	78000
	20	26385	67809	144700	15500	160200	80100
	21	31305	80454	149000	15500	164500	82250
	22	31713	81510	153500	15500	169000	84500
	23	32428	83340	158100	15500	173600	86800
	24	32428	83340	162800	15500	178300	89150
	25	32428	83340	167700	15500	183200	91600
	25	32775	84232	172700	15500	188200	94100
	26	32813	84330	177900	15500	193400	96700
	27	33225	85388	183200	15500	198700	99350
	28	33225	85388	188700	15500	204200	102100
	29	33225	85388	194400	15500	209900	104950
	30	33918	87169	200200	15500	215700	107850
	31	34303	88159	206200	15500	221700	110850
	32	34765	89346	212400	15500	227900	113950
	33	34765	89346	212400	15500	227900	113950

2.         From the above table it is seen that the OROP x 2.57 is always lesser than 50% of the Pay in the Pay Matrix + MSP. This is in contradiction to the assertion of O/o CGDA and Chairman, PARC.

Part II

# Notional Pay range indicated on Page 198 of PCDA (P) No. 608 for OROP Rs 36420 x 2 i.e Pay of Rs 72840 is Rs 70900 to 73030 and Pay is Rs 187700. Add MSP Rs 15500 = Rs 203200. So pension should be Rs 101600.   

Second table

5.         For source of information, please see Para 9 of ibid letter and Notes below

Rank	QS	OROP from Cir 555	OROP x 2.57	Pay in 7 CPC Pay matrix for Level 13A (Army Officers Pay (Amendment) Rules 2017	Add MSP to E	Total E+F	Pension in 7 CPC 50% of
A	B	C	D	E	F	G	H
Brig	28	36420	93600	187200	15500	202700	101350
	29	36425	93612	187700	15500	203200	101600
	30	37275	95797	193300	15500	208800	104400
	31	37280	95810	199100	15500	214600	107330
	32	37280	95810	205100	15500	220600	110300
	33	37570	96555	211300	15500	226800	113400
	34	37570	96555	217600	15500	233100	116550

Notes

* These were consequences of the recommendations of a GoM of 2008, Cabinet Secretary Committee Reports of 2009 and 2012. The GoM and the CSC were convened on the orders of the honourable Prime Minister. The MoD and MoF deliberated over the recommendations before implementing them. 

** This amount is the average of the highest and lowest amounts of pension drawn by personnel holding the same rank and having rendered the same number of years of service. The methodology, the sample/model on which O/o CGDA made the calculations has not been placed in the public domain. It has also not been disclosed to members of the Services of the Joint Working Group headed by then CGDA.

***      However, as specific amounts have not been mentioned by the Jt CGDA (Pen), the data is merely speculative at the present juncture and may not withstand an objective analysis.

4.         The data provided does not, however, appear to be correct. Re-computed data indicates that 50% of Basic Pay + MSP (Col I) is higher than the OROP x 2.57 (Col D).

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