What is OROP and why should you care?

With recent news coming in about the deteriorating health of decorated veterans who are in fast-unto-death till OROP is not implemented and United Front of ex-servicemen requesting President to intervene; let’s touch upon an important trending issue of OROP or One rank one pension.



 

  • History- OROP was the basis of deciding pensions till 1973 when the then Prime minister Indira Gandhi terminated it. Since then, it has been highly debatable and politicized issue. So much so that it was one of the prime task in manifestos of INC as well as BJP. Since INC couldn’t do much in it’s previous term, lot was expected from current government. Hence, the outrage.
    Has been 5 months since that tweet.

     

  • Pensions– Let’s touch up on what actually it is and what is the demand. Pension of an army solider is 50% of last salary drawn and above that Dearness allowance(DA). What this essentially means is that soldier retiring from same post in 1995 and 2015 will get different pensions irrespective of number of years they have served in that position. That’s the fundamental argument that both pension should be same.

    For those wondering why DA doesn’t cover it all! PC- Ajit kumar
  • Why is that needed?
    It’s not just about welfare of veterans or people who have died for country. A country needs young army, unlike civilian employee who retire at age of 60, soldiers retire at an average age of 35! Hence, unlikely to see many pay commission, 2 at best.Furthermore, at age of 35, there’s little probability of absorption in another department of government. Some relax that bar for soldiers but more often than not there isn’t much option.

    It’s not just about money. PC- Indiatoday

    Then there’s moral obligation to government to take care of these army veterans  and provide for their needs for the part they have done in serving their country. It’s also morale of army officials that’ll take a boost once OROP is implemented as it’ll show how much government cares about them.

  • Sounds like win-win! why the hurdle?
    It’s always the same hurdle that is the financial hurdle. It’s all a rough estimate and we know how our governments are pro at sticking to budgets. On 25th August, a tweet surfaced which was removed in no time. An alleged off the record statement by Arun Jaitley that the One Rank One Pension, or OROP, demand by the defense personnel was neither “financially feasible” nor “sustainable”. Real or not, clearly states the government’s viewpoint on this issue.Let’s see all that in terms of usual hurdle and financial hurdle.

 

  • Pandora’s box!
    Let’s ignore the financial strains which is the primary reason to decide whether OROP will be implemented. The state police, central police, paramilitary services all will demand the same thing since they carry weapons and protect civilians and implementing for these will not be financially feasible. Government started National Pension Scheme in 2004 which was essentially contributory pension scheme but if OROP is implemented, those civilian employees may ask government to contribute instead of themselves.

 

  • Legal terms and conditions argument – Someone who joined 40 years ago cannot be paid same pension as someone who joined 20 years ago as they join on some terms and conditions. Also, OROP says if a person is serving as Major for 20 years and then retires and other soldiers also serves as Major but for 4 years and retires, they should get same pension which presents a legal hurdle.
    All eyes on him.

     

  • Administrative hurdles- There are veterans and families which are getting pension since 1950s, all the calculations needs to be reworked. There were all manual records back then and considering there are 20 lakh pensioners, it’s herculean task in itself!

 

  • Financial hurdles
    The approximate cost of implementation of OROP is INR 8,400 crore and this is only a one time cost. As new pay commission come up, this will keep burgeoning and burgeoning which may result in unsustainable defense bills. A beautiful article on Scroll tells us why OROP will not see the light of day in 2015-16 and probably not even in 2016-17 considering the grim financial outlook of capital markets. With stock market crash, decline in rupee and growth estimate, coupled with the fact of not being able to reach disinvestment target of INR 70,000 crore (because capital market!), government will struggle with budget deficit which if won’t be controlled will result in downgrading by rating agency that will in turn effect the investor confidence and  the growth rate. Thus completing the vicious circle.With government’s obsession on classic oxymoron of high growth and less fiscal deficit, it seems unlikely if this gets implemented in current year. Quoting scroll:
10 former chiefs had last week warned the government against a further delay in granting OROP last week, saying it would erode the military’s morale and pride.

”Clearly, unless growth takes off, revenues zoom and the disinvestment process stays on course; Jaitley has little leeway to increase the overall expenditure. If growth doesn’t happen, even an increase in expenditure of a few thousand crore of rupees can wreak havoc with his deficit plans. This is why the finance minister is likely to delay OROP, or implement it in a diluted form or in a phased manner to reduce the outgo this year.”

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