OPS becomes a headache for Shinde-Fadnavis govt | Mumbai news - Hindustan Times
close_game
close_game

OPS becomes a headache for Shinde-Fadnavis govt

Mar 15, 2023 12:52 AM IST

MUMBAI: With 1

MUMBAI: With 1.8 million government and semi-government employees currently on strike to press for the reintroduction of the old pension scheme (OPS), the Shinde-Fadnavis government is in a tight spot. With both parliamentary and assembly elections round the corner, it is wary of antagonising the employees. However, the adverse financial implications of re-introducing the OPS has put it in a quandary.

HT Image
HT Image

In 2005, the Vilasrao Deshmukh government, in a bold move, discontinued the old pension scheme on account of its precarious financial situation with a fiscal debt of around 1.10 lakh crore. The government replaced the OPS with a new pension scheme under which the pension amount was deducted from employees’ salaries. The pension amount also came down from 50 percent of the basic salary to 25 percent.

Hindustan Times - your fastest source for breaking news! Read now.

Employees’ unions began raising the demand after states like Chhattisgarh and Himachal Pradesh implemented the OPS. It further gained ground during the recent legislative council elections when teachers’ unions made its restoration a condition for voting in the teachers and graduates’ constituencies. The opposition Maharashtra Vikas Aghadi supported it. Worried about the impact of this on the election results, chief minister Eknath Shinde and deputy chief minister Devendra Fadnavis announced that the government was considering the re-introduction of the OPS.

Fadnavis, who heads the state finance department, was always reluctant on account of the financial burden involved. He first expressed his apprehensions last December, saying that the scheme would burden the exchequer with 1.10 lakh crore and push the state towards bankruptcy. Political expediency, however, made him change his stance during the council election campaign.

Financial implications

“The problem of OPS will start from 2028 and by 2032, it will get out of hand because in 2028, around 2.5 lakh employees are due to retire, which will increase state expenditure on establishment costs phenomenally,” Fadnavis said in the legislative council a fortnight ago. It was the first clear indication from the state government that it might not go ahead on its election-time announcement on OPS.

“We spend 58 percent of revenue on salaries, pension and repayment of debt. If OPS is implemented, the burden will be felt after 2030-32 when the establishment cost could go up to 83 percent of the total revenue,” Fadnavis reiterated last week.

Figures released in the state budget makes the picture even more clear. According to estimates, the government is expected to spend 67,384 crore on pension to about 0.6 million retired employees in the next financial year, which is 14.99 percent of 4,49,523 crore, the revenue expected during the period. With OPS, this figure could go up to 30 percent of state revenue and leave significantly less money for welfare schemes and development work.

Employees’ unions, on the other hand, have their own arguments. Vishwas Katkar, convenor of the steering committee of the government employees’ unions, cited six states that had re-implemented OPS and said that if they could with no harm done to their economy, so could Maharashtra. “Most of the employees are going to retire only after 12 years,” he said. “If the government plans this systematically, then OPS can be implemented without any hitch.”

Political compulsion?

Ignoring the OPS demand would be politically unwise for the ruling parties as was evidenced in the legislative council elections where the BJP lost the Nagpur Teachers Constituency, a traditional stronghold, as well as the Amravati Graduates’ Constituency. In the current circumstances, where the ruling parties are facing several prickly issues from agrarian distress to Maratha reservations, they would not want an additional section of voters going against them.

Political analyst Hemant Desai said that expediency made parties go in for OPS without caring about the financial implications. “The Congress made it a poll promise in the Himachal Pradesh elections and benefited,” he said. “Shinde and Fadnavis did the same and may have now realised their mistake.”

SHARE THIS ARTICLE ON
Share this article
  • ABOUT THE AUTHOR
    author-default-90x90

    Faisal is with the political team and covers state administration and state politics. He also covers NCP.

SHARE
Story Saved
Live Score
OPEN APP
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Friday, March 29, 2024
Start 14 Days Free Trial Subscribe Now
Follow Us On