Nitin Pai: Why military must use economic reasoning | Business Standard Column

Nitin Pai: Why military must use economic reasoning | Business Standard Column

My VIEW:

 After this article came in print, Prime Minister Modi announced from the
ramparts of Red Fort on August 15 that his government was for OROP ‘in
principle’ and an acceptable solution was being worked out. Those who find
fault with the methodology being followed by retired defence personnel need to
take into account certain realities on the ground that existed during the
pre-reform days. These include:

(i)               
Those who joined defence and civil
services and organisations in the public sector did not have option to bargain
and decide their service conditions including remuneration package. What
attracted them to the service was the job security and social security
including healthcare and post-job income by way of pension and family pension.

(ii)             
Till GOI decided not to offer the benefit
of defined benefit pension scheme to employees who joined service after
December 31, 2003 and introduced New Pension Scheme the pension component was
considered as part of the wage structure. For mysterious reasons, the NPS was
not made applicable to defence employees.

(iii)           
Defence staff were under the wrong
impression that they were a special category and this feeling was reinforced by
government’s decision to exclude them from the disadvantages of NPS.

(iv)           
Unlike in other services, defence services
personnel retire at different ages on various grounds and therefore there are
ex-servicemen of ages 40 to 85 or 90, who have retired from 1960’s. The
implications of OROP are therefore manifold.

(v)             
The demand for compensating for the
erosion in value of pension and ensuring a decent pension for ex-servicemen is
genuine. The plea for OROP has delayed realisation of this genuine demand.

M G Warrier,
Mumbai