Breaking News
1. Massive fire at Varanasi railway station parking, over 200 vehicles gutted      2. First Sambhal, Then Ajmer: Ex-CJI Chandrachud Under Fire For ‘Opening Floodgates’ Of Survey Pleas      3. Chennai Airport Shut, Trains Hit As Cyclone Fengal Intensifies      4. 2nd Hindu Priest Arrested In Bangladesh Amid Protests: ISKCON Member      5. Man climbs mobile tower in Kota, threatens suicide over his tractor seizure      6. Body of 2-year-old, his grandmother recovered from river in Manipur      7. Bodies of six abducted in Jiribam found; Kerala CM and UDF leaders argue over BJP defection      8. Several flights, trains disrupted as Delhi covered in smog, visibility down      9. Delhi air quality: AQI at this Delhi station above 1500      10. Pawan Kalyan condemns deaths of 2 Hindu girls in Pakistan who faced ‘atrocities’      11. India not to travel to Pakistan for Champions Trophy, wants its matches in Dubai      12. India not to travel to Pakistan for Champions Trophy, wants its matches in Dubai      13. Samosas, cakes meant for Himachal Pradesh CM Sukhu served to his security staff instead; CID probe on      14. We remain undeterred: Australian outlet on Canada's ban after Jaishankar presser      15. 'We Are Here Only As Pilgrims, Do Our Work & Leave': CJI DY Chandrachud Bids Farewell To Supreme Court      16. PM Narendra Modi slams NC-Cong's Article 370 resolution: 'Conspiracy against Kashmir'      17. IPL Auction: James Anderson registers for first time      18. Sharda Sinha dies: Huma Qureshi, Manoj Bajpayee, and others grieve singer's death      19. Man shot in gang war outside Raipur jail, sparks outrage over security lapses      20. After MK Stalin, Udhayanidhi warns Vijay, TVK: Only DMK will win in 2026     

Revisiting the Old Pension Scheme: A Major Risk to India's Financial Stability

  • Posted on February 3, 2023
  • News
  • By Akta Yadav
  • 347 Views
2023/02/IMG-20230203-WA0035-300x300.jpg
 Old Pension Scheme:-

Introduction

The Haryana Chief Minister, Manohar Lal Khattar, recently spoke about the drawbacks of the Old Pension Scheme (OPS) and cited a WhatsApp message to support his argument.  The Chief Minister stated that a Central government official sent him a message indicating that if the OPS is implemented, the country could be bankrupt by 2030.  Old Pension Scheme Old Pension Scheme He also referred to former Prime Minister Manmohan Singh's 2006 opposition to the OPS, calling it a "myopic vision" that could make India backward. The Reserve Bank of India (RBI) also warned about the reversion to the OPS by some states, saying it could result in the accumulation of unfunded liabilities in the coming years.

The National Pension System (NPS)

In 2004, the Union government introduced the National Pension System (NPS) as a defined contribution pension scheme, replacing the old pension scheme. Under the old pension scheme, employees are entitled to a 50% pension amount based on their last drawn salary. However, the NPS is a contributory pension scheme, where the pension amount depends on the employee's contributions.

Risk to States' Finances

Economists have expressed concern over the reversion to the OPS, stating that it could put stress on states' finances. Montek Singh Ahluwalia, former Deputy Chairman of the Planning Commission, called the move one of the biggest reversals. The RBI report for 2022-23 stated that states have budgeted an increase in revenue spending, led by non-developmental expenditures like pensions and administrative services. Old Pension Scheme Old Pension Scheme

Budget Allocations

The RBI report also highlighted that funding for medical and public health and natural disasters has been reduced, while the housing outlay has been increased.

Conclusion

The return to the OPS could pose a major risk to India's financial stability and put stress on states' finances. Several economists and the RBI have expressed concern about the move and the potential accumulation of unfunded liabilities in the coming years. It is important for the government to consider these warnings and make informed decisions that ensure the long-term financial stability of the country.  
Author
No Image
Author
Akta Yadav

You May Also Like