A day after virtually conceding that GST will miss the April 1, 2016 roll-out deadline after the Narendra Modi government abandoned the idea of convening a special session of Parliament, the Centre wanted to keep alive the hope, saying that it will try to prepone the Winter Session of Parliament. Businessworld.in had broken both the stories – that the Modi government was contemplating a special two-day session on GST; and that its special session efforts would yield nothing as the Congress remained unrelenting. The Congress refused to come on board, as a result why the government had to abandon the special session plans. On Thursday, Spetember 10, however, Union Parliamentary Affairs Minister M Venkaiah Naidu sought to keep alive the GST hopes by saying that it would be his government’s endeavour to advance the Winter session of Parliament, after the Bihar elections. The Bihar elections are going to be one of the most bitterly-fought elections ever, and much of the posturing in the just-concluded Parliament’s Monsoon session was related to that. The ruling alliance feels that after the state elections temperatures will cool, and the main Opposition party will see reason. It hopes that immediately after the Bihar elections, the two main parties would make up, pass the legislation in the Rajya Sabha with a two-thirds majority, and immediately ask their respective state governments to follow suit, so that 50 per cent of the states pass it too. The NDA ruled 10 states and the Congress nine. It’s, however, easier said than done. As if to drive home the point, Congress president Sonia Gandhi on Thursday (10 September) again sought to remind the government of the supposed impropriety cases involving Sushma Swaraj, Vasundhara Raje and Shivraj Singh Chouhan, indicating that the bitterness between the two parties remained deep-rooted. Another Congress leader, Anand Sharma, sought to turn the mirror to the NDA saying that GST, originally, was a Congress legislation, and that the BJP had done a lot to delay it, with Modi as Gujarat CM being its staunch critic. The Modi government may have missed the bus as far as GST roll-out date is concerned but what it also apparent is that the government’s parliamentary strategy and statecraft left much to be desired in this entire episode.
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Under RSS pressure, BJP states like Maharashtra, Rajasthan, Haryana and others have not permitted field trials of GM crops, reports. Suman K Jha With the Bharatiya Mazdoor Sangh disassociating itself from the September 2 all-India strike call given by 11 other trade unions, and the RSS patting the back of the Narendra Modi government at the recently held coordination meeting, one might have got the impression of a picture-perfect BJP-RSS family, but fresh problems appear to be brewing for the government, with RSS affiliate Swadeshi Jagran Manch (SJM) planning a possible stir against the Government. The SJM is alarmed by the go-ahead given to the field trials of 10 genetically modified (GM) food crops by the Genetic Engineering Appraisal Committee (GEAC) last week. The GEAC is the top regulatory body in the country that deliberates on and approves the use of genetically modified crops in the country. In the meeting held last week, GEAC is believed to have given its go-ahead to field trials of 10 GM food crops. While no one in the Environment Ministry is willing to speak on record, Swadeshi Jagran Manch’s Ashwani Mahajan told Businessworld that “eight varieties of GM rice, one variety of GM sugarcane and one variety of GM maize have been approved for field trials in the GEAC’s last week meeting”. Environment Minister Prakash Javadekar is yet to put his stamp of approval on GEAC’s latest decision. In the past, Javadekar has said that the march of science cannot be stopped, but the government has met with stiff resistance from the RSS on the issue. In December 2014, in response to a Rajya Sabha question, Javadekar had said: “There is no scientific evidence to prove that GM Crops would harm soil, human health and environment. GM crops have beneficial traits such as insect resistance and herbicide tolerance, stress tolerance, fungal resistance, disease resistance, drought tolerance, (and they) enhance yield and nutrition that may help in food security”. SJM’s Mahajan, on the other hand, told Businessworld: “We are thankful to Environment Minister Prakash Javadekar for putting the last decision of GEAC on hold, and we hope that the latest decision of GEAC too will similarly be put on hold. Else, we will be forced to oppose the move and resort to an agitation”. It’s under RSS pressure that BJP-ruled states like Maharashtra, Rajasthan, Haryana and others have not permitted field trials of GM crops in their states. Country’s premier agriculture research body, Indian Council for Agricultural Research, in its vision document Vision 2050, released recently, called for research into genetically modified organisms “for enhancing productivity and farmers’ income”.
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The Cabinet on Wednesday (09 September) cleared spectrum trading guidelines under which telecom operators will be able to sell radiowaves to other service providers, a move that will help address the problem of spectrum shortage. "Cabinet has approved spectrum trading today. Telecom sector has been demanding it for optimum utilisation of spectrum," Telecom Minister Ravi Shankar Prasad said here.As of now only government is allowed to allocate spectrum to telecom firms through auctions. The decision move is expected to increase efficient use of radiowaves by enabling telecom operators, who have a low subscriber base or unutilised spectrum lying with them, to trade in radiowaves."The ownership right will be of government of India. That right of trade he can trade with someone else fully between two service providers," Prasad said. For entering in trading agreement, telecom operators will not require prior permission from government but the company will have to inform licence issuing authority 45 days before entering into trading agreement, the minister said. The seller and buyer entering into trading agreement will have to give an undertaking that their pact is in compliance to all rules and regulations. "In sample check if it is found that undertaking is wrong then action will be taken including cancellation of trading agreement," Prasad said. The trading is also expected to indicate market rate of radiowaves. At present it is determined only through auctions conducted by the government. "Spectrum trading has been permitted in all the bands," Prasad said. Trai has suggested that telecom companies will have to trade spectrum at service area level and not a portion of it. The minister said that it will address the non-contiguous spectrum issue and allow telecom operators to provide better service. Prasad said telecom operators will be able to trade spectrum allocated to them under old licensing regime after liberalising it by paying market determined price. "Auction purchased spectrum can be straight away go for trading. The buyer will have to pay 1 per cent trading fee which will be calculated based on market rate or previous auction price whichever is higher," Prasad said. The regulator had recommended that spectrum trading will not change its original validity period for which it has been allocated to a telecom company. It has also recommended a lock-in period of 2 years on spectrum that a company acquires through auction or trading before it can trade it further.(PTI)
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Arshad Khan In a bid to boost defence manufacturing, the government of India through it’s 'Make in India' initiative has set a target to manufacture 70 per cent of defence related products domestically to reduce import bills. Currently, only 30 per cent of the total equipment is manufactured indigenously and the rest are imported. The defence services of the country account for nearly Rs 2.29 lakh crore of the Central Government Budget which is 2.5 per cent of the GDP and 13 per cent of the Central Government expenditure. The defence manufacturing sector of the country has witnessed insignificant development since independence, leaving no choice for the government except importing to strengthen its ammunition. Baba Kalyani, Chairman of Kalyani Group, says that over the last one decade, India has developed into a major investment zone for foreign manufacturers. “Policy like Make of India continues to mammoth investments in the country’s manufacturing sector. A proper participation of the private sector with global companies will increase capabilities of domestic defence companies.” The Kalyani Group formed a joint venture with Israel’s Rafael Advanced Defence Systems to develop aerospace and defence products in February this year. Trade pundits believe that the ‘Make in India’ initiative will bring fresh rays of hope in the indigenous manufacturing sector. Prime Minister Modi’s thrust to increase the share of manufacturing from the current level of 15 per cent of Gross Domestic Product (GDP) to 25 per cent by the year 2022 and create employment opportunity for ten million people per year will only be possible if his pet project is successful in bringing more Pvt players and global investment in the country. Currently, the $2 trillion economy is expected to become a $5 trillion economy by the year 2025. Participation of private companies in defence was restricted till 2001. Since the private sector was allowed to invest in defence, the sector has garnered attention of big players. Of late, Reliance, Tata, Mahindra are among other big players showing interest in investing in the sector. Anil Ambani’s Reliance Aerostructure Ltd (RAL) will set up the 6,500 crore unit in Multimodal International Hub Airport at Nagpur (MIHAN) under the PM's pet project Make in India. Tata and Mahindra, two companies which have shown interest to invest in the sector have been given permits to manufacture naval systems like torpedoes, sea mines and boats. Beside that, Tatas have been given right to upgrade major fighting units like the T 90 and T 72 tanks of the Indian Army. The only thing which concerns the development of defence industry in the country is the inadequate funding in R&D. KD Nayak, director- R&D of DRDO says, “Amount invested in R&D in India is very low when compared to developed countries. DRDO receives only six per cent of the total defence expenditure when ideally it should have been ten. Not just government but the private sector in the country also invests very less in R&D.” The overall allocation to R&D is 0.85 per cent in India compared to western countries which spend in the range of 2.2 per cent to 3.5 per cent.
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Finance Minister Arun Jaitley said on Wednesday he still wants to implement a new goods and services tax (GST) by next April 1, although the opposition Congress party could delay its passage through the legislature. Addressing a business conference, Jaitley said it was important to stay on the path of reform and build momentum to achieve higher economic growth. The current global economic situation presented an opportunity for India, he said. The GST, which economists estimate could add 2 percentage points to India's gross domestic product, has failed to clear parliament due to a blockade of the upper house by the Congress party. Jaitley said the composition of the upper house - which represents India's states - would change next April, suggesting that the balance of power would tilt in favour of the government. Asked whether bad loans and banking were the main worry for the economy, he said: "The banking system is a matter of concern - it is not the main worry, there are no grounds for panic." Jaitley, who was speaking at an Economist conference, highlighted steel, power, electricity distribution companies, and to a lesser extent textiles and highways as the main sectors under stress. Tax DisputesIndia is seeking to resolve pending tax disputes with investors and hopes to resolve "legacy" issues in short order, Jaitley said. Jaitley was speaking after the finance ministry decided last week not to press claims for a Minimum Alternate Tax (MAT) against foreign portfolio investors. India remains locked in major back-tax disputes with telecoms group Vodafone and Cairn Energy. Without referring to individual disputes, Jaitley said the government was trying to resolve pending tax disputes, many of them outside the courts, and said that these legacy issues would be resolved "in not much time".
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Despite huge financial burden, the government has taken a decision to implement the One Rank One Pension, Defence Minister Manohar Parrikar announced on Saturday (05 September). Benefit of OROP will be given with effect from July 1, 2014, a date immediately after the present government assumed office, Parrikar said. OROP arrears to be paid in four half-yearly instalments; all widows, including war widows, to be paid arrears in one instalment. To begin with, OROP would be fixed on the basis of calendar year 2013, he said. Pension will be re-fixed for all pensioners retiring in the same rank and same length of service. The government is considering appointing a committee under a judge to go into the issue of equalisation of pension, a leader of the ex-servicemen group fighting for One Rank One Pension said after a meeting with Defence Minister Manohar Parrikar. Veterans reactIt is good what govt has announced on OROP, we are satisfied, Major Gen (Retd) Satbir Singh said after Parrikar made an onnuncement on OROP. "We do not accept the decision not to give OROP benefits to those who have taken voluntary retirement," Singh said. Ex-servicemen however, disapproved of setting up of one-member judicial committee. "It should be under Defence minister and not given more than one month," Singh said. They have sought clarifications on issues like pre-mature retirement benefits and averaging of pension. According to us, govt has only accepted one of our demands and rejected six, Singh said. Pension equalisation, an issueMaj Gen Satbir Singh (Retd), Chairman of Indian Ex-Servicemen said the government while accepting the concept of the OROP, was still insisting on pension revision every five years and that is why it was thinking of constituting a committee. Singh said after the meeting that in that case a representative of the veterans and one from the services should also be in the committee. He said the committee should not take more than one month. Ahead of government’s likely announcement of OROP, Singh said government has broadly accepted the concept of the scheme and that they will study the details after it is made public. The delegation, he said, presented their views on the sticky issues including pension equalisation. “Government has accepted the OROP concept broadly,” the Chairman of Indian Ex-Servicemen movement told reporters after the meeting. 'No junior should get more pension than senior'He said it was conveyed to the Defence Minister that no junior should get more pension than senior and that there is nothing like Voluntary Retirement Service in defence forces. Sounding a conciliatory note, Singh said the government has accepted 60 per cent of the demands of the ex—servicemen. He, however, said the “bone of contention” — revision of pension — still remains. Parrikar meets Amit ShahAfter the meeting Mr. Parrikar met BJP president Amit Shah. Later a BJP leader said all demands of the ex-servicemen have been accepted except the pension revision demand. BJP MP Meenakshi Lekhi, who was present at the party chief’s house, said government is close to announcing a solution that will cost the exchequer at least Rs 10,000 crore. The ex-servicemen have been demanding that the pension revision should take place at least in every two years while government has proposed a five-year revision. (PTI)
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Suman K Jha points out that the BJP’s inability to take along its own allies, leave alone the Opposition, has been its bane The advent of Narendra Modi on the national scene was met with huge expectations. This is agreed upon by the entire political class, including the Congress. And even the non-Congress opposition doesn’t doubt the sincerity of the Modi government towards its avowed developmental goals. Biju Janata Dal’s party leader in Lok Sabha B Mahtab tells Businessworld: “Sincerity of this government is not in doubt like the previous government’s; it’s (mostly) external factors responsible (that are responsible for the non-delivery of electoral promises, including the economic ones”). The ruling BJP and its allies are united in their firm belief that while the government is making all attempts to fulfil all its economic promises, it’s the Congress that is creating roadblocks. Asked what has changed since the Modi government assumed power, BJP ally Shiromani Akali Dal’s (SAD) Naresh Gujral says, “There’ve been no corruption cases (against the Modi government ministers). The ministers are working 12-14 hours a day. Ministers are not allowed foreign jaunts.” That PM Modi has instilled a new work ethic among the ministers and even hard-to-change bureaucracy is widely acknowledged. Officials are at work on time. Stories do the rounds in the corridors of the Capital about how senior IAS officials find it difficult to keep pace with some of the younger ministers in the Cabinet, as a result of which some have even opted for “easier postings”. A senior IAS officer says that it was only in this government that he had to stay back in office, often till midnight, at Delhi’s Shram Shakti Bhawan, power, Coal and new and renewable energy Piyush Goyal’s office. A Secretary in the Union Government tells that under Modi, there is “a new sense of purpose and urgency in the bureaucracy”. Asked to list the positives under the Modi government in the last 15 months, SAD’s Gujral says: “The government is trying to get passed the GST Constitutional Amendment Bill, which is the single-most important economic reforms measure after the 1991 opening of Indian economy”. On the ease of doing business, he says, the Government is reviewing the Companies Act passed by the Congress government which made it virtually impossible to do business. “Tax rates are being lowered like in South Asian economies. Coal-based power plants have coal reserves of 20-25 days, unlike the UPA days where the reserves used to be in the range of one day to one week”. Mahtab says that “Under Modi government some positive steps have been taken to check parallel economy. Some other announcements like the one on Mudra Bank have been good too.” When asked what has changed under the Modi government, Union Minister Rajiv Pratap Rudy says that one big change is that institutions have been performing their role well under the Modi government. “The well-networked people, who were in power for 60 years are feeling restless. But we will see a robust economic framework in very near future,” he says. Not everything is hunky-dory though, even for the BJP and its allies. A senior BJP leader requesting anonymity tells Businessworld that the land Acquisition Bill has been the biggest embarrassment for the government. Among the negatives, Mahtab says that while no one is casting any doubt over the sincerity of the government, nothing has been done on the delivery front. “Manufacturing is yet to take off; employment is on the downslide; and investment is not coming,” he says. The Congress, as also the Left, however, feel that under the Modi government, the government-Opposition ties have definitely taken a turn for the worse. “Union Ministers are competing with each other in berating the Opposition. There’s no constructive engagement at all. The government should keep in mind that it could pass key legislations like the ones on insurance, coal mines and mines & minerals only due to active cooperation of the Congress,” says the deputy leader of Opposition in the Rajya Sabha, Anand Sharma. The BJP’s inability to take along its own allies, leave alone the Opposition, has been castigated by the Shiv Sena, with the party leader Sanjay Raut saying that BJP, under a new government, has been avoiding alliance meetings, as a result of which even the floor management takes a hit. Modi’s Reforms In A Logjam; Read Businessworld magazine 24 September Edition
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India Inc is worried but there is no panic, writes Ashish SinhaIt certainly made for a lively television news -- pictures of senior Congress leaders and BJP leaders, ministers sparring during the recently concluded Monsoon session of Parliament. For some of the captains of India Inc, these pictures were a glimpse of future trouble. "If legislators don't legislate economy suffers. We still believe that GST will come sooner than later. But that fact that it could not be discussed in the last session troubles us. What if similar scenes get repeated in the next session?" asks a senior executive of a top automotive firm. According to a chief financial officer of a leading FMCG firm, the India growth story has suffered a setback in recent months. "Consumption in rural markets are on a decline. Next quarter looks challenging. The feel good factor, which was there before, is depleting fast." A recent report by Prabhudas Lilladher captures the current economic picture. As per the report, the merchandise exports have been steadily declining since July 2014 and have been contracting in January-June 2015 period. It says that exports which were at a monthly run rate of $22 billion will continue to face headwinds due to slower global growth. The report points out that the current account deficit has been under control due to a fall in oil prices. But according to Dr. A Didar Singh, a former civil servant who is now the Secretary General of FICCI, there is no panic at all among India Inc. "They continue to believe in the India growth story. India is still a good investment destination. Of course, the recent global cues have somewhat distorted this image of India but overall the basic fundamentals remain strong," he said. "Look at road infrastructure where contracts worth over Rs 30,000 crore for 2,500 kilometres were recently awarded. Inflation is under control, concerns over Monsoon are no longer there," said the FICCI Secretary General. "For some, the expectation from the government may have dampened but we all understand that nothing changes dramatically in India. It takes time to implement change. India Inc. has always been patient when it comes to governance issues," he added. According to market experts, the outlook for the automobile sector also remains optimistic, especially in passenger cars and commercial vehicles till the festival season. However, the state of affairs for the large Central Public Sector Undertakings (CPSUs) is more worrying, especially those declared sick by the Central government. Today, a number of Public Sector Undertakings are in limbo for one reason or another. According to a senior PSU official, inaction (no clarity on its future, funding, wages, etc.) at the government level is leading to uncertainty across 30-plus CPSUs (out of 65) that have been declared sick (over 50 per cent erosion in net worth during preceding four years) at the end of 2014-15. So far, the central government has shut down five such sick CPSUs that impacted around 2,700 employees. According to a former bureaucrat who has worked on the boards of some of the CPSUs, the government should just hive off some of these sick companies who have no chance for turning around. Big names figure in the list of sick CPSUs. These include BSNL, MTNL, Air India, National Textiles Corporation, Hindustan Antibiotics, Scooters India, Eastern Coal Fields, Bharat Coking Coal, and Hindustan Shipyard among others. The latest report by India Ratings & Research (Ind-Ra), a Fitch group company says there may be slippages in the disinvestment target of the government which has been budgeted at Rs 69,500 crore for FY16. It says that the department of disinvestment is hopeful of mobilising only Rs 30,000 crore this fiscal. “Ind-Ra believes the food subsidy may again overshoot the budgeted amount by Rs 4,480 crore in FY16. Although fertiliser subsidy for FY16 will fall short of the budgeted amount, Ind-Ra believes like FY15, the remaining amount due in this fiscal will be rolled over to FY17 to meet the budgetary target,” it said. But there is good news as far as government finances are concerned. According to Ind-Ra,the central government has got an additional fiscal space of Rs 37,160 crore in 2015-16 fiscal on account of both lower oil subsidy and additional revenue generated under some budget heads. Ind-Ra’s estimate shows a total savings of Rs 18,75 crore on oil subsidy for the government. Ind-Ra also expects significant upside to the budgeted amount with respect to excise duty collection in FY16. This is mainly because of the increase in the excise duty on petroleum products between November 2014 and January 20.Modi’s Reforms In A Logjam; Read Businessworld magazine 24 September Edition
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C H Unnikrishnan says the GST logjam along with failed land Bill has badly affected the image of the Narendra Modi government Though the Government contention that it may convene the second part of the Monsoon Session of the parliament to pass key legislations after reaching a consensus with all political parties has revived industry’s hope that the GST Bill will get passed, the industry leaders have shown their acute distress over the new government’s failure to keep its promise even after a year in power. The corporate captains had in a plea last week asked the law makers that the legislations like GST must not be stalled by the "perpetual disruptions" in Parliament. The GST logjam has become yet another issue after the failed land reforms that has badly affected the image of the Narendra Modi government, which had promised progressive changes in the country in its “ease of doing business” campaign. An online petition signed by more than 15,000 people, including industry leaders such as Adi Godrej, Sunil Munjal, Rahul Bjajaj, Kris Gopalakrishnan, Kiran Mazumdar-Shaw, Anu Aga, Ajay Sriram among others emphasised that GST has taken a long time in coming and has taken years of consensus building. "Important laws like the constitutional amendments in goods and services tax, which improves India's growth rate is held up,” they said. In the Monsoon Session, which got over on August 13, the government had introduced the Bill in Rajya Sabha, but it failed in face of a protesting Opposition. “GST could significantly contribute to the growth of the country and its states,” say the corporate leaders. Godrej Group chairman Adi Godrej says the GST is one of the most critical reforms for India as it will create a smooth and efficient market, lower costs and raise tax revenues. “It will certainly help generate millions of new jobs so it’s unfortunate that it gets delayed due to one or other reason,” he added. Others in the industry echo the same views. “Indian Industry has been pleading for early implementation of GST for the past 5 years. Since replacement of existing indirect taxes levied by central and state governments by GST is good for the country and therefore political differences should be kept aloof by law makers in passing of the Constitutional Amendment Bill related to GST,” says Sumit Mazumder, president, Confederation Indian Industry (CII), one of the key representative body of Indian industries. Although the GST reform has been on the cards for more than a decade, lack of consensus among state governments, including the Gujarat government, which was then headed by Narendra Modi as the chief minister. GST is expected to usher in a uniform tax regime across the country. But since it broadens the base through the territories of states and the Centre, a constitutional amendment is necessary. While it will simplify tax administration, it will also eliminate economic distortions in production, trade and consumption as it streamlinea several indirect taxes under one title. According to Finance Minister Arun Jaitley, implementation of GST will help adding at least 2 per cent to the national gross domestic production or GDP considering the efficiencies of the new system that gives credit for taxes paid on inputs at every stage of the supply chain and taxing only the final consumer. It also avoids duplication of taxes and thereby cuts production costs. But the other argument is that it may have impacts on the states’ revenue and their political autonomy. So the critics say that the positive impacts of GST are yet to be proved on a practical level. The industry bodies claim that GST will subsume various levies like excise duty, service tax, VAT, CST, entry tax and octroi. “GST will remove state-wise barrier, entry forms as well as check-posts. Manufacturers can think of “one India” as a customer if properly positioned,” according to CII. “A large number of central and state taxes will disappear and it would mitigate the cascading effect of taxation in the value chain. Exports are likely to go up as Indian products will become competitive both at domestic and international markets,” said the CII head in an email interview. Asked about alternative solutions to the introduction of GST Bill, the CII said; “The main purpose of the constitutional amendment related to GST is to empower central government to tax goods beyond the manufacturing stage i.e upto retail stage and allow the state governments to tax services. This increase in taxation base cannot be achieved without amendment of the constitution." Modi’s Reforms In A Logjam; Read Businessworld magazine 24 September Edition
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Veterans believe that the stalemate with the central government over One Rank One Pension can get over if the government honours its commitment. Is OROP announcement on the anvil or will it get delayed again? Ashish Sinha reports. Since Wednesday (September 2), indications coming from ex-servicemen and those mediating on their behalf was clear. Modalities of One Rank One Pension (OROP) are getting sorted. Which means, the government will soon make an announcement to this effect which will not only provide OROP from April 1, 2014 to over 23 lakh veterans and over 6 lakh widows, but will also have the details on the financial outgo to the government. A contentious demand from ex-servicemen of revising OROP annually has not been accepted by the finance ministry which is insisting of OROP review every five years. But veterans have indicated a middle ground – review OROP every second year. As per definition OROP means uniform pension based on rank and length of service irrespective of the date of retirement. Thursday (September 3) is the 81st day of protest by ex-servicemen in the national capital. Thirteen retired soldiers are on indefinite hunger strike. Relay hunger strikes are taking place in some 60 towns and cities. But the much awaited announcement continues to allude the veterans. Insiders say there are differences in the approach made by ex-officers and those retirees who are below officer’s rank. Also, demand for an annual correction (by some percentage) on the revised pension is doing the rounds as the government is in no mood for an overall revision every year or even every second year. “There may be a cascading effect on pension given to non-defence people. Who can stop some retiree to legally challenge it demanding similar benefits at a later stage,” said a retired bureaucrat who does not wish to be named. The window for announcing OROP is narrowing down with each passing day with the proposed announcement of election dates in Bihar expected by the Election Commission anytime next week. Once the election schedule is announced, the central government cannot make announcements that entails benefits to any section of the voters. “If OROP is delayed now, it will get delayed till November end,” says a veteran. Decoding OROPSet aside the emotions, OROP has been a simmering issue pending administrative action since 1974. Because up till 1973 OROP formed the basis for determining pension and benefits for the defence forces. It was discontinued post the 3rd Pay Commission report in 1973 because of an 'ex-parte' decision states a Rajya Sabha report tabled in December 2011 which recommended OROP. Today, our ex-servicemen are on streets demanding OROP for over 23 lakh retirees and over six lakh widows. The concept of OROP simply means bridging the gap between the rate of pension of the current pensioners and the past pensioners, and also future enhancements in the rate of pension to be automatically passed on to the past pensioners. Contentious IssuesThere are three contentious issues – financial, administrative and legal – due to which the government could not implement it in the past. Perhaps these reasons hold true even today. We will come to the financial implications later. First the administrative constraints. Deposing before the Rajya Sabha panel, officials said passing the benefits to all living ex-servicemen as there is no cut-off date. As per the retention schedule of records of defence pensioners which is kept for 25 years, the manual records of those retiring in 1980s may be difficult to locate. The legal view presented said if pension and emoluments were passed on to somebody who retired 30 years ago, there would be inherent discrimination against the terms and conditions of service or the qualification of service that one was entitled to fulfil (it would go against certain past Supreme Court judgement). The law ministry therefore had opined against OROP, it was submitted. Now the financial implications, as was argued before the Parliamentary panel. Records with the Office of Controller General of Defence Accounts showed if OROP was given in 2011-12 to ex-servicemen who retired before 01 January 2006, it would cost the government an additional burden of Rs 1,300 crore. By 2016-17, the total combined figure for defence personnel’s pension was projected to swell to Rs 10,135 crore (factoring in a 25 per cent increase due to 7th Pay Commission and the 10 per cent annual growth). The finance ministry had argued that the civilian pension, which stood at Rs 7,840 crore in 2011-12 would jump to Rs 62,218 crore by 2016-17 by applying the same principles. Budget documents show, the pension budget for 2015-16 stands at Rs 54,500 crore and covers around four lakh defence civilians (who retire at 58-60 years). In 2006 the defence pension allocations stood at around Rs 20,400 crore. The sharp escalation is attributed to the recommendations of the 6th Pay Commission. Similar trend may present once the 7th Pay Commission gets implemented from next year, the government fears. But the veterans are in no mood to back down. They have long argued that Jawans and persons below officer rank retire at an early age of 35-37 years. They need OROP, it has been argued. As a defence veteran said in a recent television debate, "We are now past rhetoric, reasoning, calculations and financial implications of OROP. A promise was made by the NDA government and the Prime Minister. It has to be honoured. Delays in announcing OROP will only intensify the stir." It appears there are no easy solutions. ashish.sinha@businessworld.in
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