What is OROP and where is it stuck? - India Today Article

What is OROP and where is it stuck?

The One Rank One Pension scheme remained forgotten until the Sixth Pay Commission presented its recommendations in 2008.

For almost two months now, Jantar Mantar, in the heart of central Delhi, is the theatre of a very different battle. Black armband wearing ex-servicemen in regimental accouterments, moustaches quivering with rage and voices screaming betrayal, are on a relay hunger strike demanding One Rank, One Pension (OROP) or, equal pensions for similar ranks and same length of service, regardless of the last drawn pay. Posters on the stage list three places like they would do for military campaigns - Rewari in Haryana, Siachen and the aircraft carrier INS Vikramaditya-locations where Prime Minister Narendra Modi promised to grant OROP over the past year.

The government says it is already committed to implement OROP. It was first announced by President Pranab Mukherjee in his speech on June 9 last year and then by Finance Minister Arun Jaitley in his February 28 budget speech where he set aside Rs 1,000 crore. The delay in implementation is beguiling. The government says it is still "working out the modalities". Ex-servicemen smell perfidy. The government, they suspect, wants to dilute the very definition of OROP. Hence, the street protests at Jantar Mantar.

"We are fighting for the most needy sections of society, over 6.45 lakh widows of soldiers," says Major General Satbir Singh, chairman of the Indian Ex-Servicemen Movement (IESM) which has led the demand for OROP since 2008. "Today, a soldier's widow gets a pension of just Rs 3,500. How can she raise her children with this paltry sum?"

The OROP issue has triggered a different war between North and South Blocks just a kilometre away from Jantar Mantar. Late last year, Defence Minister Manohar Parrikar said it would cost the government Rs 8,293 crore to implement its promise of OROP. The move will benefit an estimated 2 million ex-servicemen and 6.45 lakh surviving spouses of military personnel. This spike in the government's annual pension bill has led to differences with the finance ministry which has reportedly turned down the Ministry of Defence's OROP formula.

One story has it that a heated meeting between the defence and finance ministers ended with Parrikar threatening to quit if OROP was not speedily cleared. The finance ministry is believed to have tossed the OROP ball into the court of the Seventh Central Pay Commission which will present its report to the government this October.

The NDA swept to power partly on three promises made to ex-servicemen: the setting up of a war memorial in the heart of Lutyens' Delhi, appointing a veteran's commission and granting One Rank, One Pension. The government is yet to move on the first two and yet to implement the third. Nowhere does it risk a serious loss to its credibility as it does with the delay over OROP.

Narendra Modi is not the first Indian prime minister to worry about the problems of ex-servicemen and pensions. In 1982, PM Indira Gandhi set up a high-level committee to inquire into the problems of ex-servicemen, the government's first-ever such body. It had been prompted by her return as PM in 1980 when she had also held the defence portfolio for two years and when complaints poured in from retired soldiers. In March 1984, she appointed Minister of State for Defence KP Singh Deo to head a committee which included several central ministers - Vayalar Ravi, Janardhana Poojary and PA Sangma.

The committee met ex-servicemen across the country and discovered that one of the root causes of their unhappiness lay in defence pensions. Prior to the Third Pay Commission of 1973, the armed forces paid all its retired personnel 75 per cent of their last basic pay. Soldiers, who made up 85 per cent of the Army, were not paid a pension as they served only for five years.

Why is OROP needed?

This changed with the implementation of the Third Pay Commission in 1973. The Pay Commission, which decided pay and salaries for all central government employees, brought the armed forces into its ambit and equated them with civilian personnel. In one fell swoop, officers and men now began to receive only 50 per cent of their last pay. Civilian pension was enhanced from 33 per cent to 50 per cent. The government also increased the tenure of its soldiers from five to 15 years. This meant that a soldier would now be over 35 when he retired.

A second anomaly crept in 1979 when Finance Minister H.N. Bahuguna hiked the pay of serving soldiers by merging a portion of the basic pay to the dearness allowance. This effectively increased their pensions, calculated at 50 per cent of the last pay drawn for 10 months. Thus, the first disparity between pensioners who had retired before and after 1979 crept in.

On October 27, 1984, Singh Deo's committee presented its 160-page report with a list of 69 recommendations to Indira Gandhi. India Today accessed this report that first used the word OROP and recommended that the government grant it. Defence pensions were not part of the terms of reference of the committee. The committee decided to include it because pension-related problems were given top priority in representations from ex-servicemen's organisations as also individuals of all the three services.

The committee cited the precedent adopted by the government for handing out pensions for judges of the Supreme Court and the High Court. The government implemented 66 of the 69 recommendations of the committee. It put three crucial suggestions on the backburner-a separate commission for ex-servicemen, an ex-servicemen finance corporation, and, OROP. It was the first time that the government had signaled its reluctance on OROP; it would not be the last.

The issue of OROP periodically resurfaced in the Fourth and Fifth Pay Commissions but was never implemented. The Ministry of Defence preferred to narrow the gap between past and present pensioners by making one-time payments to 'modify parity', like the committee headed by then defence minister Sharad Pawar did in 1991.

OROP remained forgotten until the Sixth Pay Commission presented its recommendations in 2008. The Pay Commission widened the disparity between military personnel who had retired before and after January 1, 2006-the date from which it would take effect. The implications of the Sixth Pay Commission were that a soldier with 17 years of service retiring before 2006 would get Rs 7,605 less than a soldier retiring in 2014.

A Major General with 33 years of service who retired in 2006 would get Rs 30,000 less than his counterpart who retired in 2014.

This huge disparity instantly sparked demands by ex-servicemen's movements for equal pension. The OROP fire was lit. The UPA turned down OROP for administrative, legal and financial reasons. To pass on the benefits to previous pensioners would be a gigantic administrative task because records of pensioners prior to the 1980s were held in handwritten registers. The law ministry had warned against implementing OROP and held out a Supreme Court judgement which upheld the government's right to announce a cut-off date for any emolument. Besides, said the bureaucrats, other government services like the paramilitary forces too would ask for OROP. A 2011 report of a committee headed by BJP MP Bhagat Singh Koshyari recommended OROP. The committee also precisely defined what it meant by OROP-equal pay for the same rank in the same length of service irrespective of date of retirement. This committee report too went into cold storage.

The UPA relented only when the 2014 general elections were upon it. In February 2014, it released Rs 500 crore for OROP in its interim budget. In April 2014, a draft government letter signed by Defence Minister A.K. Antony listed out the revised pay scales for pensioners (see chart). OROP provided huge benefits to the lower ranks. A pension parity would double pensions given to soldiers, fr­om Rs 4,000 to more than Rs 8,000. It would also benefit pensioners who had retired at the lower ranks, parti­cularly Majors who would see their Rs 14,000 monthly pensions double. (These are yet to be implemented).

The UPA's sudden U-turn on OROP was forced by the NDA's PM candidate Narendra Modi who announced OROP at an ex-servicemen's rally in Rewari, Haryana in September 2013. But as the current impasse shows, it now seems that the Modi government is having a rethink and may even be reluctant to implement its proposals in full. The Seventh Pay Commission is set to be implemented beginning January next year. If OROP is not implemented soon, veterans fear the Seventh Pay Commission will only widen the disparity between pensioners. The issue, as Rajeev Chandrasekhar, Member of Parliament in the Rajya Sabha says, is more than just pensions. "At a time when countries such as Britain are entering into legal covenants between government, citizens and their armed forces-enshrining in law the country's obligations for the sacrifices and service of armed forces-it's important that we do the same and most importantly not to break OROP commitments made to our veterans and serving men and women."

When did the OROP issue surface?

Successive governments since those of Indira Gandhi have worried over a phenomena. Each year, nearly 60,000 trained Army soldiers retire and become civilians. This is among the largest drain of trained manpower in the world. The 1.5 million-strong armed forces, the world's fourth largest, retires its soldiers at the age of 34 to ensure they retain their youthful profile. Most draw military pensions that ranges between 35 and 50 per cent of the last pay drawn.

The Sixth Pay Commission was the first to suggest a way out of the pension trap. The Commission presented its report in 2008, in the midst of a surge in central paramilitary force numbers to counter left wing extremism. It devoted a full chapter to the issue of lateral induction to what it saw was the clearest solution yet to providing trained manpower for central paramilitary forces and providing sufficiently long tenure for defence forces personnel. It even suggested abolition of the armed forces pay group structure so that a lateral shift would not lead to a loss of pay. But this was not to be.

While implementing the report in 2008, the government promised to "examine the issue at a later date". After five years, in 2013, the home ministry finally wrote to the Central Pay Commission that the proposal was "not acceptable at this point". The proposal for laterally inducting personnel to save paying them pensions, was thus quietly buried.

Can NDA afford to implement OROP?

An Indian Army presentation to the Seventh Pay Commission earlier this year attacked the very basis of the government's opposition to OROP: that pensions are simply unaffordable.

The MoD's opposition to OROP came through in its 2011 deposition by the Secretary (Expenditure) before the Koshyari Committee estimated it would cost Rs 1,065 crore to implement OROP. This figure would increase by 10 per cent each year, finally touching Rs 2,379 crore by 2016-17, when the Seventh Pay Commission would add a 25 per cent increase in pensions. This calculation, as Parrikar's newest OROP estimate of Rs 8293 crore now shows, underestimated the payout.

The Army presentation prepared by its Pay Commission Cell, excerpts of which were accessed by india today, says this is far from the truth. The Army has linked defence pensions with the growth of the GDP to show that they are actually shrinking as a percentage of the defence pension budget with regards to GDP. The Army says the present pension bill of Rs 54,500 crore also includes those for 4 lakh defence civilians. "There is no doubt the (pension) figures would rise in absolute numbers. However, when viewed as a percentage of the nation's GDP, the expenditure on defence pensions shows an overall declining trend-from 0.54 per cent of the GDP in 1999-2000 to 0.38 per cent in 2014-15," the Army presentation says.

The ex-servicemen have pointed at the bureaucracy as being the stumbling block to OROP. "It is the bureaucracy that is denying us our rightful dues. Before he took charge of his bureaucrats, (Parrikar) was fed figures ranging from Rs 1,300 crore to Rs 22,000 crore to create a scare of aFINANCIAL shortage," says Major General Satbir Singh. But the bureaucrats deny this. "Left to itself the bureaucracy would not like to implement OROP because of various reasons such as other services asking for it. But once the political leadership commits to it, then all other reasons cease to matter," a senior defence ministry bureaucrat says.

The ex-servicemen, have meanwhile, intensified their agitation with calls to boycott the government's commemoration of the Golden Jubilee of the 1965 India-Pakistan war this month and, an indefinite hunger strike after August 15.

The political will to implement OROP seems to have vanished and this is what is worrying retired service chiefs.

At least two former service chiefs, Admiral Arun Prakash and General Ved Prakash Malik, recently warned of the impact of the OROP on the morale of serving soldiers. General Malik, Army chief during the 1999 Kargil War, said: "The government must take a decision soon. The agitation is going on in different cities. Sooner or later, it will impact serving soldiers." That could be the real worry.