One Rank, One Pension highlights need to reduce pension bill - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Sunday 16 August 2015

One Rank, One Pension highlights need to reduce pension bill

By Ajai Shukla
17th Aug 15
(Truncated version of this article is in Business Standard)

Political pundits and the media focused keenly on Independence Day on whether Prime Minister Narendra Modi would grant “One Rank, One Pension”, or OROP, to retired soldiers, sailors and airmen. The defence ministry’s Department of Ex-Servicemen’s Welfare says India has 22,50,000 military pensioners (hereafter referred to as veterans), and there are another 6,00,000 widows of veterans who are entitled to lifetime pensions. Assuming conservatively that each pensioner has a family of four, over a crore voters would directly benefit from OROP. This is a significant political constituency, especially in Punjab, Haryana, Himachal Pradesh and Uttarakhand.

The money involved is significant too. This year’s budget allocated Rs 54,500 crore for defence pensions; this would rise by about 40 per cent with the additional Rs 18-20,000 crore needed to meet all the veterans’ demands. India does not count military pensions in the defence budget; even though pensions, like salaries, are a component of manpower costs. The full grant of OROP would raise military pensions to Rs 75,000 crore, only slightly less than the salary bill of Rs 93,216 crore.

What exactly does OROP involve? In essence, it means that all veterans who retired at the same rank should get equal pension, irrespective of when they retired, because they performed the same functions whilst in service and must make ends meet in the same economic conditions today. Currently, each veteran gets a pension that is half the salary he drew on the date he retired. Since military salaries have steadily risen, as determined by six successive “pay commissions” (the Seventh Pay Commission is currently deliberating another increase), veterans who retired earlier get significantly lower pensions than those who retire today.

The demand for OROP goes back to the Third Pay Commission in 1973. However, this is the first time the veteran community has organised itself so publicly. Occupying the emotional high ground --- not difficult in a country where the military is loved and respected --- veterans have signed letters in blood, returned gallantry and service medals and staged public dharnas (sit-ins), including a few hundred metres from Parliament in New Delhi. Largely siding with the veterans, the media has lambasted the government for tarrying in making good its promises. Criticism continues even after Mr Modi assured veterans on Independence Day that discussions were in their final stages and OROP would be paid out shortly.

These unprecedented public protests have their roots in late 2013, when the Bharatiya Janata Party (BJP), and its chief election strategist, Amit Shah, targeted the veteran constituency as a vote bank. Addressing ex-servicemen at a September 2013 rally in Rewari, Mr Modi promised his government would implement OROP. With the veteran community naturally biased towards the BJP’s right-wing politics and tough talk on Pakistan and terrorism, ex-servicemen rallied strongly behind Mr Modi, believing that OROP would be quickly implemented.

Meanwhile, the United Progressive Alliance (UPA) government --- staring at electoral defeat --- also promised early implementation of OROP, even allocating Rs 500 crore in its “vote-on-account” in February 2014. This, it turns out, was a token sum, as was the Rs 1,000 crore the National Democratic Alliance (NDA) government allocated in its first budget in July 2014.

The dimensions of the problem became evident to the NDA government once the defence and finance ministries began doing their sums. A key question related to when OROP should be implemented from. Implemented prospectively the payout would be Rs 10,000 crore; implemented from early 2014, when it was announced, twice that amount would be needed.

Given the fiscal buffer provided to the government by low oil prices, the financial blow could be absorbed. However, given the bitter inter-service rivalry between the military and the Indian Administrative Service (IAS) officials who man key positions in the defence and finance ministries, officials have raised alarmist questions about the spill-over effects of OROP, and the prospect of other services, especially “central armed police forces” (CAPF) like the Border Security Force and the Central Reserve Policy Force also demanding OROP.

For many veterans, the delay in OROP reflects a more serious and longer-standing conspiracy between civil servants and politicians to whittle away the relative status of the armed forces. This is evident from a letter written by four well-respected former chiefs --- General SF Rodrigues, Admiral L Ramdas, Admiral Arun Prakash and Admiral Sureesh Mehta --- who wrote to President Pranab Mukherjee that the scuttling of OROP is “the culmination of a process by which successive Pay Commissions have been used to whittle down the financial and protocol status of the military over the years vis-à-vis their civilian counterparts”.

This grudge will remain even after the full grant of OROP, which now seems a matter of time. What must be addressed, however, is the key issue highlighted: the military’s growing manpower costs. It has been earlier recommended that, instead of recruiting soldiers, sailors and airmen for 15 years and then paying them pensions for life, recruitment should be for just 5-7 years, after which trained personnel are laterally absorbed into CAPFs, where easier service conditions allow them to serve till the age of 55-60 years. This would make for a younger army, and also reduce the growing pension liability.



  2. I compare the OROP demand with the pension drawn by my late father, who retired from the MP Electricity Board in Feb 1979. At that time his pension was about Rs3000/-. By the time he passed away in Jan 2015 his pension had arisen to Rs40000/-. OROP???

  3. Our military's pension bill is higher than the combined budget of Navy and Air Force. Huge pension bill have brought companies like Ford and GM on the verge of bankruptcy. It's a huge pension bill will effect our military's modernization and relevance at a time when technology and not boots on the ground determine the outcome of any battle.
    Whether OROP is granted or not, we need to bring this massive pension bill under control. This means that we have to trim the size of our army which has 1.2 million troops. We need to bring it down to somewhere around 750,000 by doing away with 7 Gorkha regiments(manned by foreigners) and merging regiments which are from the same state. This fall in numbers can be bolstered by bringing the BSF,SSB,ITBP and similar para military forces directly under the command of the Indian Army.
    Directly absorbing retiring military personnel into CRPF or state police can improve quality of our police while bringing down the pension bill.

  4. One way out of this mess is to guarantee all ORs who retire early a job with the police force of their state or any other government job. this way their services can be utilised till 60 and the pension bill can be reduced. In armed forces all over the world the pensions are given only on reaching the age of 60. Till that age the person is expected to pick up alternate employment. This gap should be filled in by central govt. and state governments.

  5. Many more solutions exist depending on where you stand.

    1. A two to five year conscription for every government service aspirant. IAS included.
    2. Lateral induction of service officers into government services after short service tenures. No pension till retirement from the non military service.
    3. Increase short service personnel percentage in all services of armed forces from less than 30% to 70%. Younger profile will also result.
    4. Outsource armed forces function to Mr Bassi Ness man Or the Wad Rah combine. Humour the enemy with the clown pair doing front rolls along with bicep curls. They will die laughing on their own.
    5. Start pasta wars. Cheaper and wholesome. Need financial adventure to get your rocks off ? Call Chidi Chidi Bhang Bhang

  6. Defence personnel need to be recruited into state police forces and CAPF. Then the pension bill will reduce .
    The government should also apply NPS to defence staff.
    The contribution need to be made for 35 years , then NPS takes over. (There was a nice article in The economic times )

  7. one rank one pension is good. once this is implemented then we can under the principles, judicial doctrines of equity progress too, include assam rifles, indo-tibet border police, border security force given their deployment is no different from most infantry battalions. next central reserve police force given their deployment in kashmir, north east, maoist zones. and central industrial security force, and for good measure railway protection force too.
    assam rifles, ITBP certainly cannot be excluded if 61 cavalry being a ceremonial unit, president's body guard (being merely show troops),, not even tasked with security in the rashtrapati bhavan) are included. assam rifles deployment, employment is real soldiering compared to the armoured corps for jawans, NCO, JCO who can spend an entire service in jhansi, patiala, bhopal, jaipur, jodhpur, jullunder with some field firing in pokhran. and certainly more dangerous than service as an airman, NCO with the air force and again spending an entire service in airforce stations palam, hindon, race course road, jalahalli, yelahanka, bangalore, barrackpur, calcutta, secunderabad, bidar etc. not to mention the air force accounts employment in book keeping, accounting as the controller of defence accounts (CDA) does for the army, navy. which will lead to the CDA staff too being included. and then the civilian military engineering service, the border roads, GREF.
    will this coming together of the 'officer corps' and the 'rank and file' finally lead some real fair play in the armed forces. with jawans, NCO, JCO being allowed the full UN peacekeeping force payments that is granted by the UN security council instead of merely a percentage of the payment being given to them. in the case of officers the complete amount is allowed to them.
    and some equity in simple things like 'rations'. until recently officers got a higher amount of meat, chicken, fish. and eggs have been allowed to jawans, NCO, JCO only a couple of years ago. as if eggs are officer mess fare and not for jawans. and sausages, marmalade, ham, cornflakes for officers with nothing in lieu for the jawans. seems not very fair.
    and jawans children too should be allowed access to the swimming pools, horse riding schools, tennis and squash courts just like officers children are. these facilities are established, maintained with military training funds and are not part of officers welfare. why not allow jawans, NCOs to use the golf courses. they may prove to be better players, and jawans allowed to play polo too. both golf courses and polo ponies are again supported by the war establishment, and military training funds

    1. Well ur point regarding use of station facilities by OR and their wards is misplaced since they are already availing station facilities including swimming pool, golf course, tennis and squash courts... I am not sure where did u get this misplaced notion

  8. Do IAS people get OROP?

  9. * George, you missed the point. All 'services' you added for OROP retire at 60 years of age. It is only the Armed Forces that retire as per rank achieved, and very few officers retire at the ripe old age of 60!!! So comparing them with others is like comparing apples and bananas!?!? Many well meaning studies have recommended that such soldiers need to be side-stepped into the Para-Military Forces, but to no avail. Currently, with limited service age, their pensions are also very less as compared to a person of similar rank who retires from the Para-military Forces!!!! So, your claim is a scream - seems you have limited knowledge of the problem.
    * As to the next querry, do all IAS people get OROP. Well OROP is allowed to all government servants who draw pay at APEX scales at the time of retirement. ALL IAS officers RETIRE WITH APEX SCALES.

  10. @George

    I agree with you. The JCOs, NCOs and Jawans should also be allowed to down tipple in "officer's mess" with the "officers". Why discriminate between officers and foot soldiers who do all the real fighting??
    After our sainiks, sarkari babus will also demand OROP for sleeping almost 40 years in their sarkari jobs.

  11. @Anon 10:14

    No one gets OROP. It's a ridiculous demand. Now our military personnel numbering in the millions have become votebanks for the corrupt political parties and OROP anthor "election jumla".
    As if kickbacks and other misdemeanors in our armed forces were not enough, now these people have started behaving like union leaders and netas at a time when quality of our armed forces is at it's lowest.
    Govt needs to control defense expenditure.

    1. Ur comments are reprehensible and lacks any fact...veterans are demanding what is rightly is not a dole that has been requested from the government... No less than supreme court of the country has given its stamp on the validity of OROP for the armed forces...
      And yes veterans will have to behave partly as union leaders since the nation has showed them that without protesting on streets this country will deny them their right for 42 years...
      Pl ponder over this fact that there are wat widows of 1971 war who have been getting rs 132 as pension for last 42 years... Surely citizens like u wud feel proud about the honour of rs 132 that has been bestowed upon a young woman who lost her husband untimely 44 years before because he died serving the nation...

  12. @George Ninan

    All your rumblings are fair ....but not realistic and do not reflect any serious thoughts... you do not seems to know the ground realities that 99 % of General officers today are sons of JCO /OR and their first agenda of inspection generally is to visit JCO Mess !

    First, think of providing accommodation to JCO / Jawans in peace locations or separated family accommodation. Even an infantry battalion in peace tenure for two years does not get 20% of their authorisation of accommodation. There is no accommodation so how can JCO / OR children go to riding or swimming.

    Increase pay of JCO / OR and their children will be able to buy swimming costumes or golf sets and go anywhere. The proportion between JCO / OR pay has decreased drastically in favour of later in every successive pay commission.

    Why does this Army charge higher fees from the children of officers and JCOs for the same education in the same class and same school ?

    Calories for any specific class is worked out as per his job content besides his being human who requires subsistence. Do consult a dietician. Present day ration scales for JCO and Jawan are adequate and just as compared to officers.

    Your point of granting OROP to air force sergeants or Mud Corps, EME etc is valid but one can not create a class within a class.

    For all, however, only one condition apply - The ages of retirement. Let every one retire in 60 years of age. Indian Army will become worse than CRPF where a 50 plus age constable can not run after a militant in the jungles but only is fit enough to rough up an 82 year old veteran at Jantar Mantar.

    So let us go forward and make ages of retirement for all non Sword Arms soldiers to be 60. All ground crew of Airforce and navy alos retire at 60. All officers also retire at 60. No OROP for them. For fighting soldiers - parallel induction into CAPF.

    Then there is no need of OROP. However who have already retired at 36-40, the all need OROP on humanitarian and socio economic justice grounds.

    Thinking about subordinate ranks is a good thing but being crass anti officer is very dangerous which present generation of Generals usually are.

  13. @Anon 19.53

    What the veterans are demanding is an increase in their pensions which will add more burden to a huge pension bill for our armed forces. This demand is not "rightly theirs". The entire pension amount is more than the combined budget of Navy and Air Force.
    Pension revised from time to time depending upon the cost of living index. Pls don't mislead the masses by claiming that war widows of 1971 get Rs.132 as pension.
    The demand is not to link pension with cost of living index, but to link it with one rank which is most ridiculous demand. Pension is payable as per last drawn salary and not as per one's rank. Salary depends upon seniority of rank and number of years someone is in a particuar grade/rank. Needless to say it will vary from person to person, hence, pension will also vary from one individual to another depending on his last drawn salary.
    The behavior of veterans who are raising absurd demands is no different than politically strong and well off communities who have taken to the streets to unjustly demand reservations for their community.
    In a country with more than 700 million below poverty line, the nation's scarce resources need to used more judiciously and not become votebank creating election jumlas.

  14. @Anon 19.53

    After Salman Khan's and Uphaar cinema judgements, a big question mark hangs over the competence, impartiality and fairness of our courts and judges. It seems even the judges of our nation can be bought and judgements depend on who can grease the palms of our judges.

  15. @George Ninan

    your knowledge about the UN pay system is abysmal and you are totally misinformed. UN pays or used to pay $750 per man (OR, JCO and Officers) alike to the govt of India ( I repeat to the Govt of India) for Contingent contribution.

    Govt of India has rationalised that a little bit considering that everyone can not get the same pay or the natural chain of command will be effected at least psychologically. Most of the third world countries do not even pay half of that amount to their soldiers. Govt of India pays complete amount besides normal pay and allowances.

    That is it and not what you say...

  16. Oh the concerned citizens... you are so much worried about the cost of exchequer with implementation of OROP. If it is costing too heavy then reduce the numbers in armed forces. If you really have guts to do so. A nation can stand a week army, after all we have a long history of bearing brutality by so many invaders. The real issue is the lesser age profile of forces veterans. You solve this one issue the complete problem is solved. If the OROP costs too heavy then leverage the protection provided by the same force and earn more. You need comfort in strong nation but do not want to pay. Take a call.

  17. @Anon 19:35
    The Indian Army is a relic of the colonial times. It was created to enslave this country. The structure, philosophy and mindset of Indian Army is still that of colonial army. The nation's resources are needed to create wealth and raise the quality of life of 100s of millions who will consider themselves lucky if they can get two square meals a day, not to fatten retired pahalwans.
    Size of the army and pension bill needs to be trimmed. Savings from that need to be invested in modernising our military and other areas which create wealth.

  18. Lots of anonymous comments so I will remain anonymous too. Lets have a deal. If you cannot pay OROP because of the massive burden of 9300 Crores lets not have the VII CPC. Just prior to the IV, V and VI CPC, the Govt reduced the status of soldiers by upgrading their ranks to the next grade. If the CPC Index was followed, there would have been no requirement of OROP in the first place. It is because of the downgradation of Military Ranks that veterans are not able to support a decent living standard. That and the fact that Defence Pensions are being diverted to fund retirement of undeserving civilians who retire at the apex scales but would not have made it past the second promotion board if in Army if vacancies were the issue like in Army.

  19. I haveb't read the comments above but to me the solution seems a fairly simple one. Peg the pensions to some sort of an inflation measure. As prices go up, pensions go up to reflect that. I can see why the Indian government might not want that. It has historically been highly irresponsible in managing inflation.

  20. Seeing a relay of comments where I wonder where the money comes for NFFU for babus ..
    Does it only hurts when a fauji has to be paid his right salary ..
    Why are we not ready to face the reality ...

    a) Indian defence forces had higher differential and preferential salaries till 1973 as in all the modern democracies or otherwise in the present world. (Ref. )
    b) Reason for step by Step reduction in the salaries , then in promotional avenues , outside lateral placements and consequently in pensionary benefits surely must have some rational logic
    c) What is the view on early termination or compulsion for leaving a well-earned/established Govt job where no lateral job absorbsion is guaranteed (do not give dumb answer stating that Service conditions when joining were abundantly clear as this was the primary reason for the differential pay , pension and a nations obligation)
    d) Why the old systematical migration in IPS and/or CPF for SSC officers and like in emergency commission after 1962 cannot be continued with similar route for below officer level also devised.
    e) How do you justify NFFU only for select club and more importantly designing the career progression , the structure and inter-service hierarchy such way that it establishes clear advantage in promotion , salary and thus pension only to select club. More glaring is award of Apex scale to more than 95% to one arm which ultimately negates the very essence of the point(a) above.
    f) Do my countymen know that 80% of the persons in military leave at the age below 37 and remaining 19% before the age of 54. No apex scale and no NFU and no OROP.
    g) Who is otherwise paying this money spent on Babus other than the same taxpayers where Mr Modi calls OROP to be a burden on poor of the country.
    h) Do you think the political supremacy on the defence forces is same as bureaucratic supremacy?

    Can we see the white paper or the government letters giving the details where all the truth/ calculation can be seen.
    How much deceit, canard and lie will be perpetuated by Government … 42 yrs gone.
    Where is the conscious and freedom of the press and media?
    Is our Supreme court deaf and dumb ?


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