#OROP Messed up - False Mathematics of OROP Exposed

#OROP Messed up

False Mathematics of OROP Exposed 

Karan Kharb

Satyagraha, agitation and public demonstration of resentment do not go well with military ethos, much less the frequently traded politics of violence and coercive tactics like rail/rasta roko campaigns. Even though the traditional awe inspiring chivalrous image of the soldiery has been greatly dented in India, the public still looks upon its soldiers as men of very high discipline, sense of duty, commitment and valour who would spontaneously respond to their call without caring for their own safety and comfort whenever required. Trusting and respecting the authority has been ingrained in the soldier’s conscience for ages and they take the leader’s countenance on its face value.  Ironically, it was 1973, soon after the historic victory in 1971 when India’s military might dismembered Pakistan and niched a new nation – Bangladesh – on the world map, that the pension scales of military personnel were ruthlessly slashed by 30 per cent as a consequence of the 3rd Pay Commission recommendations. To rub salt on this cut, civil pension scales were raised by 20 per cent. What a reward for the resounding victory! Military men groaned and whined privately but endured it and moved on!

Through the successive years, military personnel continued losing their privileges, status, salary and pension. The Ex-servicemen felt short-changed with each successive Pay Commission. The 6th Pay Commission report added fuel to the already simmering ire of the ex-servicemen. Their quiet representations failed to fructify despite courts and authorities finding their demands genuine and reasonable. They started raising their voice against this injustice. In every case that went to the court, the judiciary upheld their case and indicted the official dispensation. Yet, instead of one rank one pension (OROP), what they received from the UPA government was a ferrying point from ‘disparity’ to ‘modified parity’ as if both were synonyms of equality.  Col (retd) Inderjit Singh, an octogenarian torch bearer of one rank one pension (OROP) agitation today along with Lt Gen (retd) Balbir Singh and Maj Gen (retd) Satbir Singh, says he has made presentations to all the Defence Ministers and Prime Ministers since the days of Indira Gandhi.  They all agreed but forty two years on the 2.5 million ESM are still waiting to get their dues. The mood of the ESM was becoming rebellious and needed to be channelized into a peaceful movement.

Eminent Ex-servicemen organisations like the Indian Ex-Services League (IESL) and the Indian Ex-servicemen Movement (IESM) led by Lt Gen Balbir Singh (retd) and Maj Gen Satbir Singh (retd) respectively became the rallying points for the anguished Ex-servicemen of the country. IESL, founded in 1964 enjoys the honour of having celebrities like Gen KS Thimaya and Field Marshal KM Cariappa as its first two Presidents. Although demonstrations and protest marches by the ESM were earlier led by Lt Gen Raj Kadyan (retd) since 2007, the United Front of Ex-servicemen (UFESM) was formed only recently by rallying together the state units of ESM organisations under the aegis of IESL and IESM to spearhead the OROP Movement in a united peaceful and non-violent manner.

Taking note of the growing anguish among the ESM and the Armed Forces at the widening pension disparities, the Rajya Sabha constituted a Parliamentary Committee in 2010 to look into the petitions and make specific recommendations. The Parliamentary Committee, that came to be famously known as the Koshyari Committee deriving the name from its Chairman, BJP’s Rajya Sabha MP Bhagat Singh Koshiyari, recorded, “there is merit in the demand for One Rank One Pension by Armed Forces Personnel” and strongly recommended that, “Government should implement OROP in the defence forces across the board at the earliest and further that for future, the pay, allowances, pension, family pension, etc. in respect of the defence personnel should be determined by a separate commission so that their peculiar terms.” These recommendations were unanimously accepted and approved by the Parliament in 2011. However, only crumbs were served to the ex-soldiers in the name of OROP and not even a military member was taken in the 7th Pay Commission, let alone a separate Commission for the Armed Forces. The UPA government did try to pacify the irate ESM by narrowing the gap between the new and old pensioners in 2010 and 2013. In what was then seen as a dirty trick to divide officers and junior commissioned officers and other ranks (JCOs/OR), the UPA government nearly bridged the gaps only in respect of JCOs/OR leaving the officers’ case unaddressed. Military bonding being what it is, the unity could not be breached and the joint struggle for OROP continued. In its last days in office, the UPA Government (MoD) issued a letter on 26 Feb 2014 to the three Chiefs of the Armed Forces defining OROP in explicit terms: “OROP implies that uniform pension be paid to the Armed Forces personnel retiring in the same rank with the same length of service irrespective of their date of retirement and any future enhancement in the rates of pension to be automatically passed on to the past pensioners.”

During the pre-election campaign, the BJP leaders had repeated derided the UPA Government for giving ex-soldiers the short-shrift and Narendra Modi, the would be Prime Minister, assured that he would implement OROP soon after forming his government at the Centre.  His blitzkrieg visits to military stations inspired a new enthusiasm among the military personnel. Last year he celebrated his Diwali with the troops at Siachen Glacier where he declared, “I am proud and happy that Providence has destined OROP to be delivered through my hands.” More than a year and a half of the Modi Sarkar in office, however, yielded nothing except promises now punctuated with complexities and huge financial burden. Economists and bureaucrats joined in to work out daunting figures that apparently scared the Prime Minister himself. Is the financial burden of OROP really as scary as it is being made out to be? Thorough analysis of the military pension bill reveals that the exaggeration is nothing but a propaganda to deny the soldiery what is their rightful due as is evident from the details of the Defence Pension Bill explained below.

Financial Mole Hill, Not a Mountain!  

Initial pay-out of OROP including arrears earlier assumed to take effect at the ‘top of the scale’ as on April 1, 2004 and if paid on April 1, 2015 stood at Rs 8,294 crore. Whereas the ongoing delay in implementation would have marginally bloated this amount, it would now be considerably reduced in view of the Government proposing to calculate OROP dues at the average of pension rates that existed in calendar year 2013. Further, the roll out is also proposed to be effective not from April 1 but July 1, 2014. By this decision the Government the projected OROP budget will be further reduced by approximately Rs 2100 crore. Adding the previously budgeted and unspent amount of Rs 1000 crore to it, an amount of Rs 3100 crore could be reduced from Rs 8300 crore estimated in the table below. Yet, the arbitrary figures ranging from Rs 10,000 crore to 22,000 crore have been extravagantly and quite frequently fed to the media and public magnifying a financial mole hill as if it were an unsurmountable mountain.  It is, therefore, necessary to remove this illusion of so-called ‘unaffordable financial burden’ by explaining the primary figures of military pension vis-à-vis the future effect of OROP:-

Ser No	Details	Amount (in INR crores)
	Total ‘Defence Pensions’ Budget (2014-15) (a)                        Share of Defence Civilians (37%) (b)                        Share of Armed Forces Pensioners (63%)	54500 20165 34335
	Subtract one time pay-outs like Gratuity, Leave encashment, commutation etc	15000 1
	Net Pension load as it exists in pre-OROP budget	19335
	Total OROP rounded up to nearest thousand (Initial outgo including arrears assuming 01 April 2014 as effective date from which dues become payable)	8300 2
	Enhanced OROP share for the next year (0.85% of serial 3)	164 3

Notes:-

1. One time pay out includes pensioner’s gratuity and allied entitlements which are neither part of OROP not affected by increase/decrease in OROP. 
2. Now with effective date being 01 Jul 2014 and OROP being fixed at average of maximum and minimum scales of pension paid during calendar year 2013, this amount will substantially reduce by approximately Rs 2100 crore!)
3. This amount is estimated to decline @ 1/5th every year until the net OROP effect becomes Zero in the 5th

Amusing as it might appear to some learned analysts, the OROP burden will decline every successive year rather than escalating. Normal escalation rate of pension budget shall, of course, continue to be determined by other existing factors other than the OROP incremental effect. It might appear strange to those who have heard that every year thousands of military pensioners are added to the existing 2.6 million and, therefore, so much more pension burden is added to the annual pension budget. But there is a catch in it. The 6th Pay Commission had resorted to ‘bunching’ of service seniority of military personnel in different trades for the purpose of fixing their pay scales in respective pay band. As a consequence, these personnel are now retiring drawing pension at the ‘bunched’ scale despite the number of their years in service being different. These bunched categories are now in their last leg of service and would taper off in another 4-5 years. Thanks to this ‘bunching effect’, the enhanced proportion of OROP will diminish rather than escalate every year.

Civil-Military Trust Deficit   

Much has been made of the OROP demand by the bureaucratic machinations to paint it as an unreasonable and, therefore, undeserved demand of country’s 2.6 million ex-soldiers, war widows, war wounded and battle disabled.  Selective leaks from official sources clearly indicate an organised attempt to deny the Armed Forces their basic due. Last minute insertion of ‘VRS’ in the Defence Minister’s press release on September 5 is the latest example of innumerable mischiefs that happen insidiously as a routine at the MoD.  The government had been consulting Lt Gen Balbir Singh (retd) and Maj Gen Satbir Singh (retd) – the two leaders of the OROP Movement – and Rajeev Chandrashekhar, MP and interlocutor to bring about a mutually acceptable settlement on OROP. While all other issues like base year, roll-out date, periodicity of review, ‘top of the scale’ fixation etc were discussed at length but ‘VRS’ had never figured during these conclaves. Obviously, because there is no such thing as ‘VRS’ in the military service. Yet, it quietly and ridiculously sneaked at the last moment in Defence Minister Manohar Parrikar’s press release alarming a section of military pensioners who took pre-mature retirement (PMR) who assumed the bureaucratic ignorance of difference between the two terms – VRS and PMR – to be a design to deny them their rightful dues.

  Recently, Prime Minister Narendra Modi was quoted having said in Chandigarh that “the credit of giving Rs. 10,000 crore OROP to the military pensioners should go the poor.” The comment has been construed to imply as if enormous funds meant for the poor of the country were being diverted to the military pensioners. “Ham apne desh vasiyon ke liye mar to sakte hain lekin unka haq kabhi nahi mar sakte. Aisa kahna to hamare jale par namak chhidakne jaisa hai”, retired Subedar Major Inder Singh of Jat Regiment said at Jantar Mantar on September 12.

In an editorial, Business Standard (New Delhi, September 6) commented, “Also, those in the armed forces frequently retire early, meaning that at any one point there may be multiple retired servicemen for every one still in uniform. This in itself is enough to increase the fiscal burden. By some estimates, it would double or even triple the existing net present value of servicemen’s pensions.” What does it suggest? Soldiers should not retire early? To be a competent, robust and dependable war fighting force, military has to maintain youthful profile. Early retirement including premature retirement is therefore a measure to ensure this paramount requirement. Lateral absorption of the retiring trained, disciplined and experienced soldiers into civil and police services has been recommended by authorities and Pay Commissions but continues to be resisted by the destination organisations and departments. It is highly demotivating for the serving solders when they see their seniors retiring in their late 30s and 40s – a stage in life when their domestic responsibilities and expanding expenses like care of old parents, house construction, marriage of dependent siblings, kids’ education are at their peak and income drastically reduced.  On the other hand those who joined civil or police service around the same time continue to serve for another 20 years or more getting the benefit of regularly enhanced salaries, promotions and at least two Pay Commission awards more than the military pensioners.

Suggestions that military personnel also should be brought under the contributory pension scheme (NPS) introduced for the Centre and State services in 2004 is also not a practicable solution because military personnel cannot avail of the scheme as advantageously as their counterparts in the civil government jobs because of early retirement of military personnel.

Is the financial burden of military pensions really going beyond nation’s affordability? A scrutiny of growth trends in the defence budgets vis-à-vis GDP allays these fears. Even as there is always a quantum increase in the defence budget, total allocation for defence spending including salaries and pensions has actually recorded a decrease from 2.9 per cent of GDP in 2009 to 2.6 per cent of GDP in 2014.  As per World Bank statistics, GDP in India averaged $ 550.27 billion from 1970 until 2014, reaching an all-time high of $ 2066.90 billion in 2014 and a record low of $ 63.50 billion in 1970. Whereas average growth rate of India’s GDP has been 1.66 between 1996 and 2015, it grew from 4.6 in 2013 to 7 in Jul 2015. India’s defence budget (Rs 2,46,727 crore for FY 2015-16) on the contrary, declined from 2.7 in 2010 to 2.4 per cent of GDP in 2014. Interestingly, Pakistan, Israel and the US allocated 3.4, 5.2, and 3.5 per cent of their GDP respectively for the same period. Alarm bells calling OROP financials ‘unaffordable financial burden’ for the country are therefore preposterous, false and perhaps even scandalous to short-change the soldier.

Integrated functioning of MoD with Military, emphasised from time to time by experts including the Kargil Review Committee, is yet to see light of the day. According to K Subramanyam, India’s noted strategic thinker and Chairman, Kargil Review Committee, “the present structure of civil-military relations lies lost in a system where politicians enjoy power without responsibility, bureaucrats wield power without accountability, and the military assumes responsibility without direction.”  Such a state is not conducive to harmonious functioning in the modern threat scenario particularly at a time when India is aspiring for bigger roles across borders and seas. The prevailing climate of civil-military trust deficit has already taken a toll of operational preparedness with stagnating modernisation and resource crunch. Higher military leadership is already under stress in the face of evolving threats and degrading morale and manpower.

Review Money guzzling Projects 

                At a time when the Finance Ministry and economists are raising alarm over OROP, if fails prudence why no attention is seen being paid to tons of money going down the drain through subsidies, food security, MNRGA and so on.  An amount of Rs 2.27 lakh crore ($37 billion) has been budgeted by Finance Minister Arun Jaitley for major subsidies like food, petroleum and fertilizers for the current fiscal. In his address on August 15 this year, the Prime Minister said that as a consequence of direct credit of gas subsidy adopted last year, as much as Rs 15,000 crore was saved in the first year itself. There is enormous scope to save and utilise the enormous funds being swindled from populist schemes by streamlining the distribution and accounting.

A CAG sample survey report published in July 2012 stated that only 3.2 per cent of the target households under the National Rural Employment Guarantee Act (MNREGA) have benefited from the scheme. This means that 96.8% of the corpus spent on this most ambitious social sector scheme launched in Independent India’s history, might be going down the drain. Since the 1980s when Rajiv Gandhi said that of every rupee spent in welfare projects by the government only 15 paise reached the beneficiaries. Subsequent studies have shown that the average utilisation figure may be still lower at around 6% only. The finance minister has enhanced budgetary allocation for the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) to Rs 34,699 crore from Rs 34,000 crore last year despite government’s awareness of funds going astray. Prime Minister Narendra Modi had eloquently derided it in the Parliament saying, “MNREGA is a living epitome of your (the Congress’s) failures. After 60 years, the people of this country are being compelled to dig ditches.”

In the light of the above facts, it would be more appropriate for the Finance Minister to mobilise an effective mechanism to throttle corruption and rake in surplus money from these corruption zones rather than squeeze and starve India’s military and our war heroes who gave their life’s best in fighting and dying for the nation. As if answering the Finance Minister’s SOS call and concern over OROP, RBI Board of Directors has approved transfer of a surplus of Rs 65,896 for the current year.  Although even full implementation of OROP will not cost more than Rs 9,000 crore, there is enough for the Finance Minister to mobilise tens of thousands of crores. And I have not yet talked of the progress made on black money!

                All arguments for and against OROP notwithstanding, agitation, protest rallies, fasts and sreet sloganeering rasp sensitivities of old soldiers. Taking to streets for getting their genuine dues is against established military ethos. Soldiers are not known to be self-seekers. They are groomed to save and protect others even at the cost of their own their own life. The same ethos, however, also instils in a soldier’s psyche the courage to fight for justice. He does not want an ounce extra, would happily forego his own share for the nation and the needy whenever called upon to, but he hates to be cheated and denied his dues. In the times of modern communication technology and connectivity, images and utterances of the protesting ESM at Jantar Mantar become viral on social media and carry the risk of infecting military personnel deployed far away. Temperamentally, military veterans abhor public demonstration and protests. In the instant case, they came out to protest when 40 years of patient appeals and peaceful representations failed to yield despite judiciary upholding their demands. The government must therefore institutionalise a mechanism to monitor military sensitivities and address their problems ensuring timely fulfilment of their genuine needs so as to dissuade them from staging public protests and rallies.

                Long ago, Chanakya had advised Chandragupta Maurya, “while the citizenry of the State contributes to see that the State prospers and flourishes, the soldier guarantees it continues to EXIST as a State. To this man, O Rajadhiraja, you owe a debt. Please, therefore, see to it, on your own, that the soldier gets his dues regularly in every form and respect, be they his needs or his wants for he is not likely to ask for them himself.”   Kautilya, known also as Chanakya, gave his king this blunt warning: “The day the soldier has to demand his dues will be a sad day for Magadha for then, on that day, you will have lost all moral sanction to be king.”