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OROP: The Agony of Choice


The nation is presently in the grip of OROP (One Rank One Pension) fever. Several army veterans are fasting unto death, passions are ignited while invectives fly thick and fast. Emotion is being invoked much more than logic and facts, often misleading the people. Ex-Servicemen complain of inadequate pension due to truncated service and limited job opportunities after compulsory early retirement. No one doubts the truth of any of these grievances, but the issue is more deep-seated. The conjecture on the impact of OROP varies from the extremely conservative to the wildly fanciful, while skirting the precise nature and magnitude of the problem.

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OROP implies uniform pension to persons retiring in the same rank with the same length of service irrespective of their dates of retirement. It implies bridging the gap between the rates of pension of current and past pensioners, and also their equalisation in respect of future enhancements in the rates of pension. One should dispel the myth that OROP is an army-specific problem. All paramilitary forces and 99 per cent of the civilian government employees are victims of an unjust system of pension. Barring a handful who have the privilege of retiring at a fixed scale, normally at the top, whether in the army or in the civil administration, all employees suffer from this discrimination.

Pension drawn by any government servant including defence personnel consists of two elements: a basic pension which is fixed at the time of retirement and a relief thereon as and when successive DA instalments are released by the Government based on the consumer price index and the rate of inflation. Central Pay Commissions (CPC) are constituted every 10 years. With every CPC award, enhancement in pay-scales and revised rates of pension are automatically passed on to the past pensioners whose basic salaries at the time of retirement are revised and re-fixed in the new scale of pay and new pension determined accordingly. While some benefits of revision are passed on to retired employees, the problem arises due to the bunching of several old pay-scales into a smaller number of scales in the new pay structure. There would be no disparity in pension if the number of pay-scales and their intermediate stages remained the same. This was the case with the pay-scales of defence forces, which were different from those of civil servants, till the Second Central Pay Commission (CPC) awards (1966-76).

The armed forces enjoyed the OROP till 1976, i.e. before the third CPC (1976-86) took an ex parte decision against the scheme and applied the civilian pension rules to the armed forces pensioners as well. This was the genesis of discrimination between the past and present pensioners. The Third CPC compressed 36 running pay-scales prevalent in government service to only 19 by merging several previous scales into single running scales in the revised pay structure. When a number of pay-scales are merged into a single running pay band, pensions drawn by all “pre-existing pensioners”, who had retired at the old scales, are fixed at the lowest of the pay band into which these old scales are merged. This is where the problem arises and disparity kicks in between the past and the present pensioners. An officer who is scheduled to retire shortly will obviously draw a higher pay than the same-rank official who had retired 10 years ago.

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With the Fourth and Fifth CPC awards, the number of pay-scales again proliferated to 34, but the problem was really aggravated when the 6th CPC (2006-16) reduced it drastically to only nine running pay-bands (PB) by introducing a number of fixed grade-pays within each band; these grade pays did not affect the pension. For example, 26 pay-scales were converted into four PBs, accommodating within a single pay-band (PB-4) a scale of Rs 37,400 – Rs 67,000 of all officers from the level of Lt. Colonel to Major General, making all of them, irrespective of their years of retirement or rank, draw the same basic pension of Rs 18,700 fixed at the lowest of PB-4, and hence less than anyone retiring presently at a higher level within this PB with higher or lower rank. This anomaly also applies to the civilian employees. All past retirees would therefore stand to suffer monetary losses which will amplify with every successive CPC awards, with ever-widening disparity between present and past pensioners.

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The resentment of defence forces on the ground of unequal pension is thus understandable, but there is another reason for their sensitivity to this. For armed forces, equality in service has two components, rank and length of service. Rank signifies command, control and responsibility. A soldier is attached to his rank and is allowed to retain it even after retirement. Differential pensions to soldiers retiring in the same rank with equal years of service also creates social inequality between them, apart from financial inequality. Nearly 85 per cent of the armed forces personnel retire below the age of 40; this is necessary to keep our fighting forces young. Even officers retire between 52 and 54 depending on their rank, while all civilian employees retire at the age of 60. A larger service-span allows the civilians more time to rise in the hierarchy and receive higher pension. Such advantages are denied to the armed forces. Though jobs are reserved for ex-servicemen, opportunities are limited. Given the hardships and peculiarities of service conditions of the armed forces, they obviously cannot be equated with civil servants.

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For the armed forces personnel, OROP is imperative. Which is why all political parties and five Prime Ministers have been in favour of it, but the demand still remains unaddressed, due primarily to bureaucratic apathy if not disinclination. Bureaucrats, who have to decide on such matters, do not stand to lose; almost every bureaucrat reaches the fixed apex scale of Rs 80,000 at which there is cent per cent equalisation of pension, whereas only the army commanders and the Vice-Chiefs of defence forces draw the apex scale. The fact that a multiplicity of committees have had to address the issue is in itself a testimony to the inherent difficulties.

On the government’s side, the major impediment is, of course, financial. In 2011, the Controller General of Defence Accounts had estimated the additional annual liability on this account at Rs 3000 crore. Today it is estimated to be about Rs 8300 crore annually which may increase to Rs 10000 crore, if the impending Seventh CPC awards are factored in, taking the base year of 2011 for fixing pension, and rolling it out from January 2015. Both points have been contested by army veterans, who want a continuous ‘rolling’ adjustment of all past pensions with present values which is unrealistic. Given that 60,000 soldiers retire every year, it will be an administrative nightmare to adjust the pensions of some 30 lakh existing defence pensioners on a running basis. Instead, the government’s proposal of adjustment once every five years in place of once in every ten years for civilians appears reasonable. The financial implication is probably being  exaggerated  by  bureaucrats  and  ministry  mandarins.

The Central government’s total pension expenditure during 2012-13 was Rs 69,479 crore, of which defence pension was Rs 43,368 crore and civil pension Rs 26,111 crore. Both have increased almost equally during the last five years. Factoring in the likely impact of the Seventh CPC, the total pension liability may increase to Rs 88,000 crore. Compare this with the Union Government’s subsidy expenditure of Rs 257,179 crore in 2012-13, of which food subsidy was Rs 85,000 crore, fertiliser subsidy Rs 65,808 crore and petroleum subsidy Rs 96,880 crore. Given the falling price of petroleum in the global market, there is some cushion to absorb the excess expenditure of Rs 18,000 crore that OROP is likely to impose, provided the Government curtails subsidy, disinvests its PSUs and implements economic reforms with urgency. If the fiscal deficit of Rs 4.95 lakh crore in 2012-13 did not throw the economy out of gear; the additional burden imposed by OROP will not unsettle it either. The nation should not be seen haggling with veterans who have sacrificed their lives to secure our borders.

Author, G Bhattacharjee is Director General (Eastern Region), CAG

(Article first published on thestatesman.com)

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