Tuesday, September 26, 2023

With swelling wage bills, pension arrears, OPS may push Himachal to the wall

PUNJAB NEWS LINE | May 06, 2023 12:48 PM

SHIMLA: The ever-swelling wage and pension bills are pushing the small hill state of Himachal Pradesh, which has been banking heavily on borrowings through market loans with the debt crossing over Rs 75,000 crore, besides committed liabilities of over Rs 10,000 crore pertaining to arrears of employees and pensioners, to the wall with not enough money to sustain infrastructure and welfare schemes.

Despite facing a mountain of debt, the less than five-month old Congress government has fulfilled promises of implementing the Old Pension Scheme (OPS), a crucial vote bank, to benefit 1.36 lakh government employees and provision of monthly allowance of Rs 1,500 for all women aged 18-60 years by covering 2.5 lakh of the 22.4 lakh beneficiaries in the initial phase.

A month after tasting the resounding victory in the Assembly elections in December 2022, the Cabinet, at its first meeting, fulfilled a key poll promise with a decision to provide the OPS to all employees, covered under the defined contributory pension scheme or National Pension System (NPS), on the pattern of party-ruled Rajasthan and Chhattisgarh. The OPS is applicable for the future employees too.

The government will spend an additional amount of Rs 1,000 crore in this fiscal on the implementation of the OPS, a retirement scheme which provides a monthly pension to the beneficiaries based on their last drawn basic salary and the years of service.

As per the policy, the OPS beneficiaries would also be brought under the ambit of GPF and those employees under the NPS, who retired after May 15, 2003, will be given OPS from the prospective date.

No deductions would be made from the employees from their salary under the NPS from April 1. If any employee wants to be governed under the NPS, he/she can give his consent to the government in this regard.

The Cabinet, at its meeting on March 3, decided to implement the OPS from April 1 and passed a resolution asking the Central government to return Rs 8,000 crore under the ambit of the state's NPS.

However, the central government has already announced that there is no provision in the Pension Fund Regulatory and Development Authority (PFRDA) Act for a refund of the accumulated NPS corpus being sought by the non-BJP states that want to restart the OPS.

Going one step ahead to implement the OPS, the central government on May 4 issued a standard operating procedure (SOP), asking the employees who wish to be covered under the OPS or want to remain under the NPS. They will have to choose an option within 60 days.

Once exercised, the option would be final and irrevocable and in case the option is not exercised within 60 days by an employee, it would be deemed that the employee wishes to continue under the NPS.

Under the OPS, the government pays the entire pension amount to government employees after retirement. And there is no amount deducted from employees' salaries when they are in service.

However, the National Democratic Alliance (NDA) government discontinued the OPS in 2004 and introduced the NPS. Under this pension scheme, every employee can contribute an amount every month till 60 years and receive a pension after retirement.

Responding to restoring the OPS, Chief Minister Sukhvinder Sukhu had told the media, "We are not restoring the OPS for votes but to give social security and safeguard the self-respect of the employees who have scripted the history of Himachal's development."

BJP insiders admit privately to IANS the OPS turned out to be a major game-changer and enabled the Congress to return to the helm.

After wresting the prestigious Shimla Municipal Corporation (SMC) from the BJP on May 4, the Congress, which left the BJP struggling to reach even the double-digit figure, an elated Sukhu said the Congress has defeated the BJP's ideology. "People have reposed faith in our four-month rule though we have taken some harsh decisions."

Saying the civic body poll results would have a bearing on national politics, Sukhu, who rose from the ranks with wide organisational experience, told IANS the results were significant as BJP national leaders -- J.P. Nadda and Anurag Thakur -- hail from Himachal Pradesh.

Justifying the party's decision for not making OPS a promise in the just concluded Assembly polls, state BJP president Rajeev Bindal said the state party leadership wanted to restore the OPS but due to precarious state's finances it was not announced.

Admitting the grim financial condition with a major portion of money going towards repayment of loans and salaries of the employees, Chief Minister Sukhu in his Budget speech said the government has inherited huge debt and a liability of about Rs 10,000 crore on account of arrears of salaries of employees and pensioners and dearness allowance from the previous government.

"Policies of the previous government have resulted in a debt of Rs 92,833 on every person of Himachal Pradesh," he said.

As per the Budget for 2023-24, out of every Rs 100 spent, Rs 26 will be spent on salary, Rs 16 on pension, Rs 10 on interest payment, Rs 10 on loan repayment, Rs 9 on grant to autonomous institutions, while the balance Rs 29 will be spent on other activities, including capital works.

"Already Himachal is spending over 60 per cent of the budget to pay salaries, pensions and repay loans, the old pension scheme is unsustainable in the long run and would lead to bankruptcy of the state," a senior bureaucrat admitted to IANS.

"The government might have to default on its other major election promises," he added.

Tourism, horticulture and hydropower generation are major contributors to Himachal Pradesh's economic development.

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