Wednesday, 22 July 2015

Passing the buck by bureaucracy - Is the PM reading this

In a recent issue of the Outlook magazine, I read that the officials in the Ministry of Finance work at cross purposes. 

The following example should serve as an example as to how this Govt works.

After having my request for a copy of the Cabinet Secretary Committee report on pay, allowances and pension related issues turned down by the Appellate Authority-Director (AG-I) of MoD and Appellate Authority - Director (Administration), Deptt of Expenditure, MoF on 4.12.2014 and 9.12.2014, stating respectively that the other Ministry must decide on downgrading the security grading of the report before it can be disclosed, I filed an online RTI application MODEF/R/2015/60050 on 12.1.2015.

The MoD promptly sent it to Deptt of Expenditure for actions as "DoE is the servicing dept for the Cab Secy Committee." When no reply was forthcoming I filed MODEF/R/2015/60180 on 30.1.2015 (and due to problem with the RTIonline website it was repeated as MODEF/R/2015/60181).

Again the MoD sent my RTI applications to DoE, which now passed the ball to the Deptt of Pensioners and Pensioners Welfare requesting comments and/or opinions of DP & PW.

I filed an RTI application DP&PW/R/2015/60293 on 25.5.2015 requesting information on the action taken on the request of DoE, MoF. I received a reply from CPIO & US, DP&PW on 12.6.2015 that I did not seek any information in the ibid online application of 25.5.2015. 

My command of the English language in jeopardy, I filed a First Appeal DP&PW/A/2015/60029 on 12.6.2015. On 22.6.2015 I received a reply which I reproduce below: -


Registration No.                 DP&PW/A/2015/60029
Name                                      S. Y. Savur
Date of Filing                       12/06/2015
Request filed with Department of Pensions & Pensioners Welfare
Status                        APPEAL DISPOSED OF as on 22/06/2015

Reply: - I have perused the reply of the CPIO with reference to your RTI request. The matter regarding down-grading of the security grading of file of Ministry of Defence was referred by the Ministry of Finance to this Department in June, 2013. The Ministry of Finance was informed vide this Department’s OM No. 38/6/2013-P&PW(A) dated 27.6.2013. The Ministry of Finance was informed vide this department’s OM No. 38/6/2013-P&PW dated 27.6.2013 that the matter regarding down-grading of security grading may be considered by the MoD under the provisions of RTI Act or Manual of Office Procedure or any other relevant instructions in this regard and that this Department had no comments to offer in this regard. A copy of this Department’s OM dated 27.6.2013 is attached.(emphasis supplied).

I continue my quest with MODEF/R/2015/61888 filed on 21.7.2015.



        

German Bailout for Greece - therein lies a tale



Some one sent this to me on the email. Couldn’t resist placing it on the blog, especially when I hear/read that Govt does not have funds to pay OROP or paying OROP is the first step to Greece-like situation, never mind that Rs 62398.6 crore or Rs 559,000 crore Revenue foregone as incentives and/or tax exemptions to corporates!

As the issues in the European Union continue I came across this humorous explanation of how the Greek bail-out really works and the role the Germans have to play.

It is a slow day in a little Greek Village.

Unusually for this time of year, the rain is beating down and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit.
On this particular day a rich German tourist is driving through the village, and stops at the local hotel. He approaches the reception desk and lays a 100 Euro note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night.

The owner gives him some room keys and tells him to take a look at the rooms and decide which one is most suitable.

The German tourist makes his way upstairs and as soon as he has gone upstairs, the hotelier grabs the 100 Euro note and runs next door to pay his debt to the butcher.

The butcher then takes the 100 Euro note and runs down the street to repay his debt to the pig farmer.

The pig farmer takes the 100 Euro note and heads off to pay his bill to the Farmers Co-operative who supplies the pig farmer with his animal feed.

The man at the Farmers’ Co-operative immediately takes the 100 Euro note and runs down the street to the local taverna to pay his outstanding drinks bill.

The owner of the taverna slips the money along the counter to the local prostitute, who is drinking at the bar. For several weeks now she has been offering her ‘services’ to him on credit. The prostitute then rushes down to the hotel and pays off her room bill to the hotel owner with the 100 Euro note.

The hotel owner then places the 100 Euro note back down on the counter.

At that very moment the German tourist comes back down the stairs, says that the rooms are not satisfactory and he has decided not to stay the night.

At that, he picks up the 100 Euro note, puts the money back in his wallet, and walks out of the hotel, gets into his car and drives off.


And so no one produced anything. And no one earned anything.

However, the whole village is now out of debt and looking to the future with a lot more optimism (achhe din in India!).

And that, Ladies and Gentlemen, is how Greek bail out works.


Friday, 17 July 2015

Misinterpreting OROP - Sunil Jain's column & my reply



Column: Rational Expectations: Short step from OROP to Greece
As OROP-type demands spiral, so will pensions—the present value of govt pensions is already 1.2 times GDP

The underlying theme of the One-Rank-One-Pension (OROP) debate is one of a nation needing to do right by its war veterans. The veterans, the argument goes, put their lives at risk to defend the motherland, so surely a grateful nation can ensure they have a decent living? How demeaning it is, the argument goes, that a colonel who retired in 1980 should be getting a pension lower than his son who retired in 2010.

Emotional arguments, however, only obfuscate the issue. A pension is really nothing but a deferred payment of wages, to help those that served—in the army, in schools, in hospitals, wherever—maintain a certain standard of living after retirement. To that extent, it has to be related to the salaries paid during a person’s working life. So, to use the logic of those in favour of OROP, if the country wanted to reward a soldier more, his salary should have been much higher than it was at the time he was serving, there’s no point hiking it post-retirement. In any case, OROP was never a term of service.

And it is not as if the nation is not doing right by its soldiers after they retire, or by its bureaucrats, for that matter. The colonel-father getting a pension lower than his colonel-son conveys the impression that veterans are living in penury, but that is not true for either them or the millions of civilians the government has on its payrolls.
Some examples are worth keeping in mind. In the case of the army, 12 years ago, a colleague’s mother got a monthly family pension of R8,000—her father retired as Lieutenant Colonel—but this is now R40,000. On the civilian side, an additional secretary who retired 5 years ago got R57, 000 as pension then, but gets R75, 000 today. 

A joint secretary who retired in 2004 got R35, 000 as pension then, and this has gone up to R60, 000 today. In the case of a secretary who retired in 1993, the pension has gone up from R4, 000 then to R102, 000 now! Whether for army officers or for bureaucrats, pensions have been galloping and the biggest beneficiaries are those whom have been retired for a longer period of time. Do the same exercise for anyone not employed by the government, whether a humble peon or the chairman of Hindustan Lever, or those who save 24% of their salary in the EPFO—there are 6 crore such people today—and you will find there is no such equivalence, anywhere.

The reason for this is the way the government calculates its wages, and therefore salaries. So, let’s say a person—this applies to joint secretaries, teachers, havildars, colonels, everyone employed by government—retired in 1995 with a basic salary of R10, 000 and a pension of R5, 000 based on the principle of pension equalling half of the last pay. In the case of all non-government employees, this amount would be worth nothing today given inflation in the last 20 years. In the case of government employees, however, the salary/pension is indexed to inflation. So, between 1995 and today, the basic salary—and therefore pension—will be increased every year to take into account inflation.

And every 10 years, a Pay Commission comes and takes care of the rest. Let’s go back to our government employee and assume he was in the middle of a scale running from R8, 000 to R12, 000. Between 1995 and 2005, while the basic would have remained unchanged, the actual salary would keep rising since the inflation-indexed dearness allowance (DA) keeps rising. Now assume the last Pay Commission raised this pay scale to R18, 000 to R24, 000. Immediately, the salary of those at the top end of the pay scale would have risen to R24, 000, with the DA reduced to zero. And then, from 2006 onwards, the DA would have started rising again each year till 2015, when the new Pay Commission comes in.

What happens to pensions? This is where OROP comes in since, once this is accepted for the armed forces, there will be demands to extend this elsewhere also. For people who retired in 2005, the basic salary is reckoned at R24, 000 in our example, as a result of which the pension will be R12, 000—with, needless to say, a built-in DA hike twice a year. Our friend who was in the R10,000 basic salary bracket finds his salary getting hiked to R18,000—the lowest of the new pay scale—as a result of which the pension rises to R9,000, with the DA clock set back at zero for the first year. In the sense of people of the same rank getting different pensions, it looks unfair, but does anyone who worked in 1995 get the same salary as someone in 2015, or get to buy gold at the same price, or property? And, with the next Pay Commission ready to submit its report by October—it is to be implemented with effect from next April—our friend who retired in 1995 will get another hefty pension bump.

Which is why defence pensions have jumped from R11, 250 crore in FY05 to R21, 790 crore in FY10 and R54, 500 crore in FY16; for the government as a whole, it is up from R26,250 crore in FY05 to R60,489 crore in FY10 to R127,507 crore in FY15. To put this in perspective, India’s GDP rose from R29,71,464 crore in FY05 to R61,08,903 crore in FY10 and to R1,25,41,208 crore in FY15—so as a share of GDP, India’s pension bill rose from 0.88% to 0.92% in a decade. As a proportion of total government expenditure, it rose from 5.3% in FY05 to 7.1% in FY15.

Another way to look at this is what each pension costs. A retired secretary to the government of India today gets a pension of R85,200. LIC charges R1 lakh today from a 60-year old to give a monthly pension of R745—which means a monthly pension of R85,200 is equivalent to a lump-sum payment of R1.14 crore! If the next Pay Commission bumps the pension up to R100,000, say, the lump-sum payment goes up to R1.34 crore. If the government was to fork out a single bullet payment for its total pension bill of R127,507 crore, it would have to pay R171 lakh crore, or 1.2 times FY16 GDP! Imagine how much this will go up by after the next Pay Commission.

It is precisely because of this unsustainable Greece-style pension crisis that, in 2004, the government decided those joining the civil services would contribute a fixed amount of their salary to the National Pension Scheme (NPS) with a matching contribution from the government, and whatever money that earns would be the person’s pension; naturally, this doesn’t grow anywhere as spectacularly as that of anyone employed by the government currently.

This should have been done for the armed forces as well, but didn’t, presumably because the government felt it could bear the burden. No matter what the grievances of the armed forces vis-à-vis the civilians who retire later than they do and therefore get a higher pension, at some point, the government will have to consider moving to NPS for the armed forces since the burden is sky-rocketing and OROP will raise it dramatically. All pensions are a function, as we know, of salaries. So, if a colonel has been in that post for 2 years, he will get a salary—and therefore a pension—that will be different from a colonel who has been in the post for 6 months. Under OROP, the pensions of all colonels will equal those of the colonel who has spent the maximum number of years in the post! If this is now demanded by teachers, babus, paramilitary forces and the police, Greece is just a step away.

sunil.jain@expressindia.com

Dear Mr Sunil Jain,

I start my reply to your piece with a disclaimer – having retired at the level of a Secretary to the Govt of India, I am already in the OROP bracket as indeed are all retired and retiring Secretaries and equivalents. So, I can be a bit more objective.

Let me now begin with your column tail first. The presumption that, say the Col in your example who has been in the rank for 6 months (a post in the Armed Forces is different and examples are Battalion Commanders in the Army, Captain of a smaller class of ship in the Navy and, a Squadron Commander in the Air Force) will be, to quote your column,  Under OROP, the pensions of all colonels will equal those of the colonel who has spent the maximum number of years in the post!” is the kind of fallacy that is blinding intellectuals like you and leading the powers that be to believe the fallacy.

I am not sure whether you (or your research assistants) had the time to go to the PCDA (P) website, but if you (or your research assistants) did not please do so at pcdapension.nic.in/. Once there please go to the drop down menu Armed Forces Pensioners/Family Pensioners. Once there do take the time to peruse  Circular No. 500 : Implementation of the Govt. decision on the recommendations of Committee on the issue related to Defence Service personnel and Ex-Servicemen – Minimum guaranteed pension to Pre-2006 Commissioned Officers / Family Pensioners  and  Circular No. 502 : Implementation of Government decision on the recommendations of the Committee of Secretaries - 2012 on the issues related to Defence Service Personnel and Ex-Servicemen- Enhancement of Ordinary Family Pension in respect of Pre-2006 JCOs/ORs Family Pensioners.  

In Circular No. 500 please visit Annexures A to G (Pages 7 to 13). You will find tables with the rank (not post) on the top of the X axis and Years of service in the Y axis.

Now let us get back to that example you quoted. Promotions to different ranks in the Armed Forces are – from Lt to Capt & equivalent after 2 years of commissioned Service, from Capt to Major & equivalent after 6 years of commissioned service, from Major to Lt Colonel & equivalent in 13th year of commissioned service and from Lt Col to Col & equivalent in the 22nd year of commissioned service.

Therefore, if one does what the bank clerk does to determine my pension he will place look at the intersection of the X axis (Colonel) and Y axis (22+2= 24 years service) and arrive at the pension of Rs 26111 whereas the Col of 6 months (22+.5 year= 22.5 years) will get Rs 24848 i.e. a difference of Rs 1263 per month.

Now, I travel up your column to the New Pension Scheme (NPS) introduced for the Central Govt employees joining after 1st April 2004. Please bear in mind that the NPS is neither applicable to those who joined Govt service by or before 31st March 2004 nor the Armed Forces personnel.

In 1998, the NDA Govt decided to increase the retirement age by 2 years, ostensibly to delay (or led by erroneous advice) the pay out of increases of pension consequent to the implementation of the recommendations of the 5th Central Pay Commission. What the advisors and the NDA Govt might not have foreseen was that those in service would drawn two more annual increments (and increases in DA) and when they retire in or after year 2000, their pensions would have increased by 50% of the increments drawn i.e. one increment. Incidentally, the earliest that Govt servants contributing to the NPS from 1.4.2004 will withdraw or be paid pensions will be from 1.1.2024 as 20 years is the minimum years of service to be eligible for full pension! In the meantime everyone in Govt service will draw their pensions under the previous rules and regulations!

Be that as it may, I would not like to speculate on why the NPS was not made applicable to the Armed Forces and await a reply to RTI filed on 23rd June 2015.

Defence Pensions and the amounts quoted include 4 lakh civilian pensioners of the various departments in MoD and not just the retired Armed Force personnel. You may wish to confirm from the Central Pension Accounting Office website to authenticate. Curiously, you have not mentioned that the MoF in its Statement of Revenue foregone for FY 2014-15 has stated Rs 62, 398.6 crores was given away as tax exemptions and incentives to corporates. The website scroll.in states,”….. it is expected to forgo revenue of Rs 589,285.2 crore ($95 billion) in 2014-15 due to exemptions granted to companies and individual taxpayers. This forgone revenue, or tax benefits, is twice the defence budget allocation of Rs 247,000 crore in 2014-15. (Please see http://scroll.in/article/711183/why-the-indian-government-is-forgoing-revenues-of-95-billion).

Now to the terms of service and pension, there is a long list but that is for another day but this requires your attention
  
A soldier posted in Kashmir (other than high altitude) and northeast gets no special allowance, whereas a policeman from the CPO gets double house rent allowance (HRA). When posted in peace stations such as Shillong, Aizwal, Sikkim and better part of Jammu and Kashmir, a soldier gets no extra allowance, whereas a policeman from the CPO gets 12.5% of the basic pay as a special duty allowance, 25% of the basic pay as hardship allowance for IAS officers of the UT cadre and detachment allowance of Rs 300 per day for all central armed police forces personnel. None of these allowances are applicable to the Armed Forces. Then there is what is called headquarter allowance of Rs 4,000 for the civil services officials which the officers of the Armed Forces don’t get. While the list of such difference is long, just one more example should drive home the point as to how civil services and the CPOs have feathered their nests. An Armed Forces officer on instructional staff at the National Defence College gets Rs 1,800 per month whereas one from the CPO and Civil services get Rs 19,000 per month. (Courtesy Lt Gen Harwant Singh (retd).

Please also take time to refer to 
www.indianarmyveterans.gov.in/view_file.php?fid=47Subject. TERMS AND CONDITIONS OF SERVICE ..... Auth: Govt of India, Min of Def Letter No 15(1)/83/D(AG) dated 28 Jul 1984 amended

46. Pension is a retirement benefit for government employees governed by a Pension scheme where in a recurring monthly payment for life and a lump sum gratuity is given at the time of retirement. The quantum of Pension and Gratuity is determined with reference to the length of service and last pay drawn. Pension has great significance since it is a measure of socio-economic justice and brings economic security in the fall of life when physical and mental prowess tends to ebb (emphasis supplied).

47. Judicially, Pension is defined as a stated allowance or stipend made in consideration of past service. In the event of death, spouse of pensioner gets a monthly payment for life whereas other beneficiaries get such payment for limited period or for life subject to certain conditions.

Finally, I will address the issue that every other Govt employee or retiree will ask. It is a bogey and I provide you an example.

MoD, in UoI vs Lt Col N K Nair & Others in IA No. 9 of 2010 in TP (C) No. 56 of 2007 in what is known as the Maj Dhanapalan or Rank Pay case, filed an affidavit that if the judgement of the Honourable Supreme Court dated 8th March 2010 was implemented, civilian employees will also demand Rank Pay and the financial impact would be Rs 20, 000 crore (the Armed Forces officers would have benefitted by about Rs 1671 crore). A 3 Judge Bench of the Hon’ble Court on 4th September 2012, did not find any reason to modify/recall/re-hear the decision. Entitled Armed Forces officers were paid arrears but the matter whether the interpretation of the Court’s order and implementation by MoD was correct is sub-judice in Contempt Petition (Civil) No. 328 of 2013 to be heard next on 18th August 2015.  

Hope you will publish this too.

Monday, 22 June 2015

ESP Caught between Commitments & Government - update on likley date of hearing in Apex Court




ESP (Ex-Service Personnel including Women Officers) Caught between Commitments & Government
(that moves as fast as its predecessor?)

From the height (2914’ AMSL) and distant (1745 kms) vantage point in relation to Jantar Mantar , South & North Blocks, and subjectivity, the ESP appear to be tormented in worse ways than can be imagined. I received alarmed emails (and a sms from +919779820270) forwarding some information from a star in the pantheon of retired officers with awesome designations and requested for my comments. (Any one knows who this Punjabi speaking person of +919779820270 is? He refused to give me his name and hung up.)

Let me share what I know of each of the aspects of the attributed and reported alarms, sms and utterances. 

A Tragedy in the Making

The writer Bharata Muni, in his work on dramatic theory A Treatise on Theatre (Sanskrit: Nātyaśāstra, नाट्य शास्त्र, c. 200 BCE – 200 CE), identified several rasas (such as pity, anger, disgust and terror) in the emotional responses of audiences for the Sanskrit drama of ancient India. (Source: https://en.wikipedia.org/?title=Tragedy.

Let us have an objective look at an on-going tragedy that would soon be worse than anything that Bharat Muni, Shakespeare or Munshi Premchand wrote.

Commitments by the Prime Minister including removing Policy Paralysis

A retired Lt Gen (used to title himself Lt Gen Emeritus, a term missing from the glossary of the Service terms) has stated on different occasions that “we have full faith in the Prime Minister” etc. It is not the PM anyone does not have faith in but his commitment is in question.

Nobody doubts the Prime Minister for we read that the gentleman, who the PM specially selected and appointed the Defence Minister, states he has sent the OROP file to the MoF some weeks ago. But the deafening silence of the PM other than in those momentous (for ESP) speeches from as diverse platforms as the ESM rally at Rewari (to the deck of INS Vikramditya and to the hypoxic altitudes of Siachen and in that monologue on ‘Man ki baat’ indicate apathy bordering on contempt on speedily fulfilling repeated commitments from the highest Executive office on implementing One Rank One Pension (OROP).

Adding to that silence are the attributed, and alarming, reports that the Finance Minister or his Ministry is inflicting the same excruciating fate on the Defence Minister’s file recommending OROP as the MoD’s civilian bureaucracy does on ESM through a spate of delays, denials and subterfuges. Ostensibly, because Rs 8298 crores is a large amount of money (that the National Exchequer can spare, more about that later in this post).

Complexity & Demands

The Prime Minister has recently added a caveat to his “commitment” on OROP – it is more complex than he thought it was may be a year ago (or earlier).

On the issue of complexity, in the months of berating the UPA for non-performance, policy paralysis, and much else vile that “Indians were not proud of being Indians” didn’t all those famed (or fabled?) information technology wonks/geeks run a Excel sheet and advise him that he was getting into deeper quick sand on his “OROP deke hi rahenge” narratives?

Was the PM not made aware that there exist employees in the Central Government, the Central Police organisations who grandly call themselves Para Military (definition of, relating to, being, or characteristic of a force formed on a military pattern especially as a potential auxiliary military force) would demand OROP but decline to obey the Government’s approval of the recommendations for lateral absorption of Armed Forces personnel in their organisations?

Surely then PM candidate & now incumbent PM was made aware by Shri Arun Jaitley of the contents of the debates in Parliament, including the sole question Shri Jaitley raised in the Rajya Sabha on non-implementation of OROP in August 2010. As records show, the Koshiyari Committee was still considering OROP in 2011 and made its recommendations in December 2011, including that OROP issue was considered earlier and if ESM were not entitled to OROP then a decision would have been taken by the past Governments and declined to be considered quoting the principle of “res judicata” (a matter that has been adjudicated by a competent court and therefore may not be pursued further by the same parties) if it came up again after 2011.     

The PMO (and more importantly, the Finance Minister) must be aware of this, and if it is not then it is time that PMO and MoF obtained the file(s) and put to rest the issue whether the alleged claims of the CPOs (calling themselves Para Military forces) is justified. Anyway, for the busy PMO some ready ‘at hand’ information.

Why Would the BSF and CPOs demand OROP

It is reported that much reviled bureaucracy (more reviled than the 10 year UPA rule!) has raised the bogey of BSF and others also demanding OROP. Let us, objectively, with assistance from the BSF website, examine the BSF’s role vis-à-vis Armed Forces, because it is the closest in its duties to the Armed Forces.
 
A cursory reading of the Border Security Forces’ website (http://bsf.nic.in/en/introduction.html) brings out (italics used by the author) the following: -

Till 1965 India’s borders with Pakistan were manned by the State Armed Police Battalion. Pakistan attacked Sardar Post, Chhar Bet and Beria Bet on 9 April, 1965 in Kutch. This exposed the inadequacy of the State Armed Police to cope with armed aggression due to which the Government of India felt the need for a specialized centrally controlled Border Security Force, which would be armed and trained to man the International Border with Pakistan. As a result of the recommendations of the Committee of Secretaries, the Border Security Force came into existence on 01 Dec 1965…..

TASKS OF THE BSF:

The tasks of the BSF are divided as follows:
1.      Peace time:
o        Promote a sense of security among the people living in the border areas.
o        Prevent trans-border crimes, unauthorized entry into or exit from the territory of India.
o        Prevent smuggling and any other illegal activity.
In the last few years the BSF has, in addition to their duties, been deployed for counter insurgency and internal security duties.

2.      War Time:
o        Holding ground in less threatened sectors so long as the main attack does not develop in a particular sector and it is felt that the local situation is within the capability of BSF to deal with. The BSF units can continue to remain deployed in particular sector even in a war situation to release the Army for offensive tasks. In the even of a major attack developing, which is not within the capacity of the BSF to deal with, the Army can be expected either to reinforce the BSF with Artillery or other support, or relieve the BSF from its role in the particular sector.
o        Protection of vital installations particular air-fields against enemy commandoes/para troopers or raids. The role can be entrusted to the BSF Units which are placed under the Army's operational Control.
o        Providing extension to the flanks of main defence line by the holding of strong points in conjunction with other units.
o        Limited Aggressive action against para military or irregular forces of the enemy within the overall plan of the Armed Forces.
o        Performing special tasks connected with intelligence including raids. These are tasks which might be entrusted to BSF Units by the Army in a war situation according to local necessity. It would, however, be expected that the state of training and equipment of the particular BSF Units would be kept in view in assessing their adequacy for the tasks.
o        Acting as guides in an area of responsibility where routes are known.  This is a task which the BSF should be able to perform.
o        Maintenance of law and order in enemy territory administrated under the control of Army. Normally, ordinary civil police force would be utilised for this task but the BSF could be used to supplement the civil police or to act in lieu thereof in a situation where civil police is not readily available. 
o        Provision of escorts.
o        Guarding of prisoners of war cages
o        Assistance in control of refugees. It is the intention to utilise civil police force and armed Home Guards etc. for these tasks but again depending upon local exigencies, the BSF might be entrusted with these tasks.
o        Anti - infiltration duties in specified area.  This is an important responsibility which will have to be performed by security forces. The exact responsibility of the BSF in this matter is still under consideration and separate instructions are expected to be issued (emphasis supplied).

New Pension Scheme

New Pension Scheme was introduced by the previous BJP led NDA Govt and announced in the Budget 2003-4. It was notified vide MoF, Deptt of Economic Affairs OM No. 5/7/2003 PR dated 22nd December 2003, and states, inter alia……   

“3. The Government approved on 23rd August 2003 the proposal to implement the budget announcement of 2003-04 relating to introducing a new restructured defined contribution pension system for new entrants to Central Government service, except to Armed Forces, in the first stage, replacing the existing system of defined benefit pension system. (emphasis supplied).

4. The Government approved the basic features of the new pension system; and setting up of an interim pension fund regulatory and development authority (PFRDA).
The main features of the new pension system are given below:
xxxxxx
• The system would be mandatory for new recruits to the central Government service except the armed forces……”

(Source: www.prsindia.org/.../bill74_2006123074_NEW_PENSION_SCHEME)

Obviously, the BJP led NDA Govt considered the Armed Forces to be different from all other Central Government employees, including the BSF and other Central Police Organisations. An RTI application has been filed with the Deptt of Economic Affairs to ascertain information on the decision of the then BJP led NDA Government to keep the armed forces out of the ambit of the NPS. An update would be provided as and when information is provided.

Segregating/Splitting the Implementation of OROP

Reports by way of emails/sms spread information that such & such a dignitary of an ESP organisation met such & such Central Minister/Minister of State and “suggested if there is a funds crunch, implement the OROP for JCOs & ORs in the first phase and for Officers in the next phase.” Good humanitarian gesture (the term is the seasonal flavour) but ignores certain facts.

Firstly, JCOs and ORs (and their widows) comprise 85% of ESP. Consequently, 85% of Rs 8300 crore is Rs 7055 crore. Therefore the effect of OROP on officers would be Rs 1245 crore. So which would impact the so-called “funds strapped” Govt?

Secondly, ORs, JCOs, and Officers are an integral and unified part of the Armed Forces because it is the most important and essential part of fighting wars. Will this Govt, on the ‘humanitarian’ recommendations of some self-appointed ESP, tear asunder that fabric apart for a few thousand crore rupees?

Thirdly, from the time of Independence, when has the Govt phased implementation of any financially connected recommendations? Pay Commissions or even the Modified enhanced pensions for retired officers, which includes Women (Circular No. 500) and Improved Pensions for retired JCOs/ORs (Circular No. 501) were implemented from the same date i.e. 17th January 2013.   

Lastly, consider the morale factor. Today, the non–implementation of OROP has drawn retired ORs/JCOs and Officers into the streets. The Govt would be ill-advised if it decided to separate the implementation dates and is rebuffed by ORs and JCOs refusing OROP till Officers are also paid.

This author was an eye witness to what happened in the Air Force when 5th CPC was prevailed up on to recommend higher Flying Pay for fighter pilots & lower Flying Pay for Transport Aircraft and Helicopter pilots and Navigators and a marginal increase in the Technical Pay for Engineers. It took the restoration of parity in Flying Pay, higher Technical pay, the calmness of the CAS-designate and a couple of AOsC-in-C, and the discipline of the Service to bring down the discontent. That was with a few thousand officers. Imagine the problem with millions of ESP not subject to the Army, Navy or Air Force Acts & Rules thereunder.
   
And the Mythical – Read it on the Govt’s website - Financial Crunch

As for financial crunch, didn’t the Finance Minister state in a written reply in the Rajya Sabha that a sum of Rs 62, 398 crore was foregone by the National Exchequer towards incentives and tax exemptions for corporates? Please see Statement of Revenue Foregone in the left side panel on website indiabudget.nic.in for corroboration.  

And read this from scroll.in/article/711183/why-the-indian-government-is-forgoing-revenues-of-95-billion

While the central government is expected to earn a tax revenue of Rs 919,842 crore ($148 billion) for the financial year 2015-16, it is expected to forgo revenue of Rs 589,285.2 crore ($95 billion) in 2014-15 due to exemptions granted to companies and individual taxpayers.

This forgone revenue, or tax benefits, is twice the defence budget allocation of Rs 247,000 crore in 2014-15.

Tax-revenue forgone is a contentious issue – an “incentive” or a “sop”, depending on ideological position – and becoming more so at a time when the National Democratic Alliance government plans cutbacks to India’s subsidy bill of Rs 2,27,287 crore ($36 billion).

While India’s subsidy bill is likely to fall almost 10%, the tax-revenue forgone is expected to increase by 7% from 2013-14.

Those on the left hold “sops” – such as accelerated depreciation, deduction of export profits of units located in special economic zones (SEZs), area-based exemptions and waivers on import duties – as evidence of government largesse to business at the expense of the poorest. Those on the right argue that tax-revenue forgone is an important business “incentive” to help the economy grow, without which the needs of the poor cannot be addressed.      

So Are We looking at a Policy Paralysis by Other Names

Central Ministers and spokespersons and no less than the Prime Minister told us (at an expense of a few hundred crore rupees) how the achhe din of scam-free, quick decision making Govt is here and the burre din are only for the burre. Though the sheen has somewhat diminished by the recent exposes, the lesser written about it the better, but will the BJP/NDA Govt decide to call a spade a spade instead of shovel, trowel or whatever?  

And the role diverse retired Army Officers led ESP organisations 

I wish there was something I could collect from the internet to make sense (first, to myself) but I have failed.

The only glimmer of some positive work so far appears to be from the RDOA, which is fighting it out in the Hon’ble Supreme Court, and winning to a fair extent as it has in the Rank Pay case and the Minimum Guaranteed Pension case etc.     

Moral of this Post: When we were kids we read lots of fables from the Panchtantra, Aesop etc. Each of these fables had a moral at the end. May be the moral of this post should be – be better informed and you will not be alarmed by the speculations that are the bane of our inboxes and incoming sms like the one I mentioned. 

Let us wait for the 8th of July 2015 and see what the Hon’ble Supreme Court rules in CA No. 2966 of 2011 in Contempt Petition No. 64 of 2009 in CA No. 5566 of 2008.    

Monday, 15 June 2015

Are we prepared for our meetings with the Defence Minister & Finance Minister or is it just for publicity?




Lt Gen Satish Kumar Bahri (retd) sent me an email on 13 Jun 2015. I share the contents with you: -

Quote “The other day at the FM's office he happened to say that Rs 8,300 is a large amount. As we were talking about pension for Cols, I said that he should check the pension amounts being paid to IAS, IPS, IFS, IRS and other class A services in comparison to the 40,000 officers of the defence services. Though they must be much less than in numbers us they are collecting much more. I wonder, with your RTI skills if you can get the comparative figs. The people below officer rank of course, can never be comparable.
It may be worthwhile (edited) if the occasion arose again.Thanks” Unquote (emphasis supplied)

After vacillating between ignoring the email (a rank discourtesy that I have never practiced) and writing  a factual reply, I decided to bite the bullet.

Dear General,
With due respect to your seniority and unlimited interest in the welfare of ESM as Chairman of the Alliance of ESM Organisations (hope I have that correctly), I find that a panoply of retired Generals and Colonels with impressive designations are reduced to spluttering with indignation and rage on the OROP issue. Maybe we, self included, are so used to being fed data by an entourage of staff that it is difficult, nay, impossible to be armed with facts and figures (implied is by ourselves before we attend such meetings). It is like going into battle sans weapons!
I am sure that some bit of home-work by someone in the delegation going to meet the Finance Minister would have helped to counter him with facts and figures, a few examples of which are as follows: -
1. He has, in his 105 interventions/participation in debates in the Rajya Sabha since 2009, mentioned OROP only once before he was appointed Defence-cum-Finance Minister. That may be the level of his interest in Defence Forces in general and ESM in particular. Please see the Rajya Sabha website for authentication.
2. He has given a written reply in the Rajya Sabha (Economic Times of 05 May 2015) that in the FY 2014-15, Corporates were given Rs 62,398 crore as tax exemptions/incentives. You may wish to verify from the figures available on the websites of the Central Statistical Organisation and Ministry of Company Affairs as to how the corporates have fared in FY 2014-15.

Where did the Rs 62,398 crore come? It came from the same National Exchequer from which Rs 8,300 crore cannot be spared!

There is no need to resort to RTI to ascertain pension amounts paid. There is the Central Pension Accounting Office (www.cpao.nic.in) and in the drop down menu of Budget, the amount allotted to each Ministry as well as CGDA towards pensions is readily available. For you convenience I have downloaded and attached the 5mb of details.    

In the only debate I was requested to participate on CNN-IBN on 01 Jun 15, I was told that Defence Minister is reported to have said that Rs 8300 crore now and Rs 20,000 crore to Rs 22, 000 crore next year is a huge amount (towards OROP). My retort was this - if the Defence Minister says Rs 8300 crore in FY 2014-15 and Rs 20, 000 crore or Rs 22, 000 crore in FY 2015-16, he has been misinformed unless someone wanted to scare the Government because at 3% increment, my calculator does not gives me Rs 20,000 crore or Rs 22, 000 crore. Due to time constraints, I could not drive home the point that it is like a tenant not paying his monthly rent of Rs 800 and complaining at the end of the year that Rs 9600 is too big an amount to pay from his budget.
My objective of writing this piece is to express chagrin at the lack of preparation for such meetings. I am sure we all (Chairman, Convener or whatever) have as much egg on our faces as the PM now has when he says it has taken him one year to find that OROP is much more complex.
With Best Wishes

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Some Thoughts: With Malice to NONE (From Brig Vijay Raheja 22:03 on 14th June 2015)

Was at the Maha Sangram Rally; today.

Officially Jantar Mantar has a capacity of 5000 – I reckon we exceeded that capacity; as place was bursting at seams. Best Part of it is that proceedings were conducted in an orderly and disciplined manner. For a change officers were there in large numbers.

Petitions to PM and President were signed by number of ESMs in blood. In this melee let us not forget that apart from fact that all ESMs organisations had come together and we had young brigade of “Citizens for Forces” led by Ankit; large number of ESMs and Veer Naries were brought in by Indian Ex Servicemen League (IESL) – there were organised buses from Rajasthan, UP, Jammu, Haryana, Himachal, and Punjab; besides there were representations from several states who reached under own arrangements by trains/buses. For those who were there and saw maroon, black and green caps (some more too – i could not register) all over the place; they were from various state units of IESL – thank you Lt General Balbir Singh for the extraordinary support.

And now some thoughts.

In response to a mail almost a year ago (to be precise 14 June 2014) I had written a mail (partly reproduced) as under:

I have been reading euphoric comments on the President’s address, in so far as ESM go, as also own goal scored in (the) meeting on 12th June (2014). But friends let me be the devil’s advocate and say that we are far from reaching our goal so early......

So friends ‘ do not count your chicken before they are hatched.’ Let me repeat what I wrote while responding to a BJP MP  on Facebook when he went gaga over ESMs being mentioned in the Presidential Address:

Have been and continue to be an AVID supporter and admirer of Shri Modi. The President’s address is a testimony of his resolve to usher in Achhe Din – to that extent I fully endorse what you have said about welfare measures for Ex-Servicemen which have found their place in the address; it reiterates Shri Modi’s resolve to start with his first promise made during the Rewari Rally – his maiden rally after being declared BJP’s Prime Ministerial candidate. But let me also be the devil’s advocate and bring to the fore........

And today we feel let down.

My own take is that since PM had started his election campaign by addressing ESM he should have ensured that promise made to ESM be fulfilled on priority. (A) year down the line some of us are meeting Defence Minister and Finance Minister trying to give correct definition of OROP. My moot question is “Have we gone wrong somewhere?” This has given rise to some further questions

· A delegation to the Defence Minister, to register our protest may be in order, but why do we go to the Finance Minister. We have no financial data to back us or counter what FM says.

· Why are ESM, particularly in OG, jumping the gun?

· Do we need an MP’s shoulder to fight for our cause?

· Why not keep faith in Service HQs – they know what is best for us.

· Have faith in people who are fighting our cases in courts.
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