1. Arun Jaitley’s OROP nightmare: As costs spiral, after Pay Panel, things will get worse

Arun Jaitley’s OROP nightmare: As costs spiral, after Pay Panel, things will get worse

As the veterans celebrate their OROP victory, and anticipate being able to squeeze out a bit more once the judicial commission is set up to address their remaining concerns, finance minister Arun Jaitley has reason to be worried.

By: | New Delhi | Updated: September 7, 2015 7:48 PM
arun jaitley orop

As the veterans celebrate their OROP victory, and anticipate being able to squeeze out a bit more once the judicial commission is set up to address their remaining concerns, finance minister Arun Jaitley has reason to be worried. (PTI)

As the veterans celebrate their OROP victory, and anticipate being able to squeeze out a bit more once the judicial commission is set up to address their remaining concerns, Finance Minister Arun Jaitley has reason to be worried. Very worried, since there is no clarity on what OROP is actually going to cost and, in the remainder of its term, the government seems to have set itself up for a series of similar agitations from others including the paramilitary forces.

There is, to begin with, the issue of early retirees.

While the veterans were not clear about whether this group had been included when the initial package was announced by the defence minister, Prime Minister Narendra Modi said they would be while inaugurating a new metro line over the weekend.

It is not clear whether the Rs 8,000-10,000 crore number bandied around as the annual OROP cost takes this into account; if not, it could boost the cost significantly.

Certainly, the cost of the Pay Commission has not been included—its report will be out in a few months. As the Pay Commission merges existing DA with basic salary of government employees, the annual pension costs will go up substantially; and that will rise further depending upon the actual pay hike that is considered.

While one Railways union has already said it also wants OROP, there will be demands from even existing civil servants that, for instance, their pensions be revised to the ‘average’ of the new pay scales as opposed to the current practice of the bottom of the new pay scale. Right now, if someone at the top of the Rs 15,000-20,000 pay scale retires, his pension is Rs 10,000.

If this scale is revised to Rs 25,000-30,000 in the new Pay Commission, the pension for the old retiree goes up to Rs 12,500—the salary goes to the bottom of the new scale—while a new retiree will get Rs 15,000. Since, in the case of the veterans, the pension will go up to Rs 13,750—the average of the scale—existing bureaucrats can also petition for this, apart from OROP itself; right now, this is available only to secretary-ranked officials.

Officials of the finance ministry argue that the FY16 Budget will not be badly affected since there is a cushion provided by, for instance, low oil prices—the OROP arrears are not to be paid out at one go, but will be paid in instalments.

The numbers, however, look quite touch-and-go since there is also the additional money needed for the recapitalisation of banks and disinvestment receipts could fall short if the markets continue to behave as they are.

The real danger, of course, will be in FY17 when, apart from the impact of OROP, the Pay Commission impact will have to be dealt with. Theoretically, the government has a lot of fat it can trim by way of eliminating waste in subsidies—in this year alone, food subsidies account for Rs 1.2 lakh crore and fertiliser subsidies Rs 73,000 crore.

The problem here is that the progress on cutting subsidies has been quite poor and, despite the low oil prices, the government has not used the opportunity to completely free up prices—so, were oil prices to start rising again, so could petroleum subsidies. Hopefully, the finance minister will use the crisis created by OROP to push the long-overdue subsidy reforms.

  1. J
    Jose
    Sep 7, 2015 at 11:26 pm
    Nice suggestion cut the subsidy to farm sector and poor and feed the Babus. (the government has a lot of fat it can trim by way of eliminating waste in subsidies—in this year alone, food subsidies account for Rs 1.2 lakh crore and fertiliser subsidies Rs 73,000 crore.)
    Reply
    1. G
      Gopi
      Sep 8, 2015 at 1:36 pm
      ROFL... get a life, ConExp...
      Reply
      1. P
        pkpk
        Sep 9, 2015 at 4:51 am
        OROP Draft - FLY in TEA - Who prepared the draft? PM obviously approved it for a stamp but somebody else approved it before it was put up to PM? Who was this somebody? Now it is almost clear that DM had no clue about VRS? The Trimurty (service chiefs) also had no idea how VRS made it to the draft OROP announcement (don't expect them to do anything about it even if they knew about it. Those are the ornaments of govt - nothing more). Babus might have put forward the idea about VRS inclusion but they are not yet so powerful that they themselves can exclude 46% veteran potion from the OROP? Then who were (or who was?) these forces who put FLY in the TEA before it was offered to veterans? This tea cup with fly came from PMO to DM for announcement and he probably didn't know that fly was there in the tea cup? Even if he knew about it, how could he remove the fly from cup because it came from PMO. So ultimately PM himself removed the FLY from the TEA cup next day. But did he really remove the FLY? Now DM says that when detailed orders are issued about OROP, everybody will come to know the status of this FLY in the TEA cup? But the bigger question is, even after it is confirmed that the FLY has in fact been removed from TEA cup, would any veteran take a sip from cup (Gen VK Singh is doubtful?)? How sad state of affairs - TEA offered to veterans but somebody managed to play mischief by putting FLY into the cup? Damage is done. Now for future, here is a suggested solution. No personal secretary or istant of PM or a Minister should be from a particular service (IAS?). Personal staff carry lot of influence, and there is always a possibility that they can abuse this influence. Surely we can find more efficient folks from neutral territory (may be on contract) to perform these sensitive jobs. Meanwhile, media so busy with all the halla-gulla, should try and find out WHO approved this FLY in TEA cup for veterans before the draft was presented to PM ( Prime ministers don't prepare drafts, so please don't suspect PM)? Once it is known who pre-approved the FLY in TEA cup, those forces (or FORCE) should be shown the door!
        Reply
        1. P
          pkpk
          Sep 8, 2015 at 3:42 pm
          RE-ORGANIZATION OF MILITARY/CIVILIAN COMMAND STRUCTURE. VRS inclusion in OROP draft indicates how ignorant are ministers about military? But the problem is the real govt (babus, who are ignorant about matters military as well as spiteful towards military?) This is dangerous situation for national security. Since there is so much communication gap between the PMO and the service chiefs, babus being the bridge. Babus will filter the information reaching the PM as per their understanding (perception or interests whatever you call it?). Past PM and the current PM consider service chiefs as something untouchable - Manmohan Singh reportedly never met service chiefs despite repeated requests and current PM's record may be same. Why? If he can meet secretaries on daily basis, why not service chiefs, who have a rank higher than secretaries? Is the matters military or national security that unimportant? Here is the suggested solution: RE-ORGANIZATION OF MILITARY/CIVILIAN COMMAND STRUCTURE - There should be only 5 commands (NOT as Army, Navy or Air force but all three combined) - Northern Command, Western Command, Eastern Command, Central Command and Maritime Command (including Strategic Command). Eastern Command will include areas right up to South East Asia. Western Command will include areas up to Russia. Maritime Command will include areas up to West Asia including Arabian Sea, India Ocean, right up to Australia. Northern Command’s area will be limited but Kashmir itself is very important and areas in Tibet and Mona can be included. All 5 commands should be commanded by a 4 star general from army, air force or navy, who will report to Joint Chiefs of Staff (4 star general but a higher appointment) in PMO deputed by another 4 star general. Both Joint Chiefs of Staff and his deputy will report to the defense minister but their offices will be in PMO. Prime Minister will be connected to all 4 star commanders in field by a hotline. There should be a situation room in PMO where regular meeting of top br of security apparatus can take place. Current service chiefs of army, air force and navy will remain in service headquarters to maintain and inter command transfers of the forces, however the military commanders in field will exercise the command and control over the forces under their command. Instead of one defense secretary, there will be secretaries each for army, air force and navy to exercise civilian control on specified areas. The above model will ensure complete civilian control over military, yet the highest level defense decision maker (PM) in touch with matters military and national defense (You know current DM’s frank admission about matters military). Imagine our PM calling the field military commander directly on hotline, eliminating all red tape. There will be no more inter service acrimony and all forces will jointly responsible for national security! If you ask for the opinion of service headquarters, that may be influenced by their self-interest.
          Reply
          1. P
            pkpk
            Sep 8, 2015 at 4:47 am
            RE-ORGANIZATION OF MILITARY/CIVILIAN COMMAND STRUCTURE. VRS inclusion in OROP draft indicates how ignorant are ministers about military? But the problem is the real govt (babus, who are ignorant about matters military as well as spiteful towards military?) This is dangerous situation for national security. Since there is so much communication gap between the PMO and the service chiefs, babus being the bridge. Babus will filter the information reaching the PM as per their understanding (perception or interests whatever you call it?). Past PM and the current PM consider service chiefs as something untouchable - Manmohan Singh reportedly never met service chiefs despite repeated requests and current PM's record may be same. Why? If he can meet secretaries on daily basis, why not service chiefs, who have a rank higher than secretaries? Is the matters military or national security that unimportant? Here is the suggested solution: RE-ORGANIZATION OF MILITARY/CIVILIAN COMMAND STRUCTURE - There should be only 5 commands (NOT as Army, Navy or Air force but all three combined) - Northern Command, Western Command, Eastern Command, Central Command and Maritime Command (including Strategic Command). Eastern Command will include areas right up to South East Asia. Western Command will include areas up to Russia. Maritime Command will include areas up to West Asia including Arabian Sea, India Ocean, right up to Australia. Northern Command’s area will be limited but Kashmir itself is very important and areas in Tibet and Mona can be included. All 5 commands should be commanded by a 4 star general from army, air force or navy, who will report to Joint Chiefs of Staff (4 star general but a higher appointment) in PMO deputed by another 4 star general. Both Joint Chiefs of Staff and his deputy will report to the defense minister but their offices will be in PMO. Prime Minister will be connected to all 4 star commanders in field by a hotline. There should be a situation room in PMO where regular meeting of top br of security apparatus can take place. Current service chiefs of army, air force and navy will remain in service headquarters to maintain and inter command transfers of the forces, however the military commanders in field will exercise the command and control over the forces under their command. Instead of one defense secretary, there will be secretaries each for army, air force and navy to exercise civilian control on specified areas. The above model will ensure complete civilian control over military, yet the highest level defense decision maker (PM) in touch with matters military and national defense (You know current DM’s frank admission about matters military). Imagine our PM calling the field military commander directly on hotline, eliminating all red tape. There will be no more inter service acrimony and all forces will jointly responsible for national security! If you ask for the opinion of service headquarters, that may be influenced by their self-interest.
            Reply
            1. P
              pkpk
              Sep 7, 2015 at 9:07 pm
              RE-ORGANIZATION OF MILITARY/CIVILIAN COMMAND STRUCTURE. VRS inclusion in OROP draft indicates how ignorant are ministers about military? But the problem is the real govt (babus, who are ignorant about matters military as well as spiteful towards military?) This is dangerous situation for national security. Since there is so much communication gap between the PMO and the service chiefs, babus being the bridge. Babus will filter the information reaching the PM as per their understanding (perception or interests whatever you call it?). Past PM and the current PM consider service chiefs as something untouchable - Manmohan Singh reportedly never met service chiefs despite repeated requests and current PM's record may be same. Why? If he can meet secretaries on daily basis, why not service chiefs, who have a rank higher than secretaries? Is the matters military or national security that unimportant? Here is the suggested solution: RE-ORGANIZATION OF MILITARY/CIVILIAN COMMAND STRUCTURE - There should be only 5 commands (NOT as Army, Navy or Air force but all three combined) - Northern Command, Western Command, Eastern Command, Central Command and Maritime Command (including Strategic Command). Eastern Command will include areas right up to South East Asia. Western Command will include areas up to Russia. Maritime Command will include areas up to West Asia including Arabian Sea, India Ocean, right up to Australia. Northern Command’s area will be limited but Kashmir itself is very important and areas in Tibet and Mona can be included. All 5 commands should be commanded by a 4 star general from army, air force or navy, who will report to Joint Chiefs of Staff (4 star general but a higher appointment) in PMO deputed by another 4 star general. Both Joint Chiefs of Staff and his deputy will report to the defense minister but their offices will be in PMO. Prime Minister will be connected to all 4 star commanders in field by a hotline. There should be a situation room in PMO where regular meeting of top br of security apparatus can take place. Current service chiefs of army, air force and navy will remain in service headquarters to maintain and inter command transfers of the forces, however the military commanders in field will exercise the command and control over the forces under their command. Instead of one defense secretary, there will be secretaries each for army, air force and navy to exercise civilian control on specifies areas. The above model will ensure complete civilian control over military, yet the highest level defense decision maker (PM) in touch with matters military and national defense (You know current DM’s frank admission about matters military). Imagine our PM calling the field military commander directly on hotline, eliminating all red tape. There will be no more inter service acrimony and all forces will jointly responsible for national security! If you ask for the opinion of service headquarters, that may be influenced by their self-interest.
              Reply
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