1. OROP: Don’t go by first-year costs, look at longer term 

OROP: Don’t go by first-year costs, look at longer term 

Costing OROP critical: Don’t go by first-year costs, look at longer term 

By: | Updated: August 27, 2015 10:11 PM
orop protest

Indian Railways union has already said it wants OROP as well, and there are the paramilitary forces that will almost certainly agitate for it. (PTI)

With 10 former service chiefs taking it up with prime minister and war veterans continuing to protest – and those on hunger strike at Jantar Mantar being rushed to hospital periodically – the pressure on Narendra Modi to implement One Rank, One Pension (OROP) is rising by the day. So much so that, he had to bring it up in even his Independence Day address. But no matter how great the pressure, the prime minister cannot afford to lose perspective and has to examine the matter from all angles, including the possibility that others could want similar facilities – at least one Indian Railways union has already said it wants OROP as well, and there are the paramilitary forces that will almost certainly agitate for it. While those leading the agitation, and their cheerleaders, point to how this will cost ‘only’ Rs 8,000 crore – some put the figure at one-and-a-half times that – this is just the first year cost. And they will go up due to inflation and, every decade, there will be a substantial jump when the Pay Commission hikes the salaries of every government employee.

Renuka Sane and Ajay Shah have a nice model for how to cost OROP. They take a case where a promise is made to pay a person who is 60 years old one rupee a day, for the rest of her life. Based on mortality data for the civilian population, they estimate this will cost Rs 3,163 as a one-time bullet payment. But government pensions are indexed to take care of inflation – at a 4% annual inflation, this cost rises 35%, to Rs 4,270. OROP requires one step more since, as a concept, this means pensions have to keep pace with the earnings of those currently in service. Sane/Shah assume salaries rise around 8% every year, as a result of which the one-time pension costs will rise to Rs 6,128, or by 94%. The story gets scarier since the bulk of the armed forces retire at around the age of 35. Once you factor in pension costs from this age till death, the basic pension cost rises to Rs 4,519, or by 42%. Do the inflation adjustment along with that for annual hikes of 8%, and you’re talking of the one-time cost rising to Rs 14,998 or by 374%. The actual numbers will differ depending upon the mortality tables for the armed forces, and will go up since family pensions have to be provided for, but this is the template the government needs to use. Once this exercise is done, it needs to be put out in the public domain. After all, if India is getting into a situation where, over a decade or so, the costs of OROP can impinge on its ability to buy aircraft or ships, the nation needs to know. Being in favour of OROP is easy, but if the choice boils down to a few less nuclear submarines versus OROP, it could be quite different.

  1. Major
    Aug 30, 2015 at 3:30 pm
    A general case study of this sort is of academically correct to a normal citizen retiring in the comfort of a steady life with long service giving time to save, to be with their families, to give good education in one place with no frequent moves, and time to establish a own house while in service that extends to 30-45 years. But for 80 % of the soldiers these comforts are just a dream. They work in inhospitable remote places without family, few lose their lives leaving young wives and their children. Many leave their services as early as 35 years and is lost in the compeive world outside. 80% of the officers leave in their early fifties. Their disciplined earlier life is treated as their weakness. If you can do the cost benefit analysis of the gains the country achieved by having a steady, disciplined Armed Forces guarding the nation's security, if at all it is possible, then the OROP demanded by the veterans is minuscule. These young men's sacrifice be quantified for future studies to claim another sort of OROP by our future generations. Our younger brothers who will take our job to save the country from the future aggressors will get benefited. They are the ones from those families counting pennies now.
    Reply
    1. H
      Hurt Indian
      Aug 28, 2015 at 9:49 am
      This is what can be called the real 'yellow journalism'
      Reply
      1. A
        Ashish
        Aug 28, 2015 at 3:37 pm
        WELL ITS RIGHT WE SHALL KNOW IT,ALREADY INDIA HAS THE LARGEST RY OF GOVT EMPLOYS TO GDP,WELL ITS TIME NOW WE KNOW WHAT IS GOING ON TO GAIN VOTES OF SERVICE HOLDERS,THEY ALL R FOOLING US,WELL WHAT THEY SAVE THEY SHALL GET THAT AND ITS INTEREST WHY SHALL GOVT GIVE EXTRA FROM OUR POCKET,OK UNDERSTAND THEY R OUR SOLDIERS BUT THEY GET A HANDSOME PACKAGE AND WE RESPECT THEM DOES NOT MEAN NATIONAL RESOURCES SHALL BE GIVEN WITH OUT THINKING
        Reply
        1. W
          Wadhwa
          Aug 29, 2015 at 9:22 am
          Have u ever calculated the intangible cost to the nation If u keep ur troops unhappy/dissatisfied ? Do u know what is the meaning / significance of morale ? U just improve the efficiencies , stop leakages, stop corruption and nab govt employees, netas aming wealth through unfair means .
          Reply
          1. B
            Bharat
            Aug 28, 2015 at 12:32 pm
            A biased article with motivated objectives. As you agree that most veterans retire at 35 can this news paper ask Renuka and Ajay to work out the financial implication of the ry and promotions with ACP till age of 60 and then pension like all civilians get and then compare. It will be 10 times more. Why differenciate ? if the nation discriminate should it not pay for this to its soldiers who are always ready to sacrifice their lives for Nation ? Ask any Babu or Neta he will pay you millions to be kept away from this commitment.
            Reply
            1. Brij Esh
              Aug 28, 2015 at 5:58 am
              Sir, One cannot disagree with the caption of the write up but as is usual headings sometime tell a different tale than the text of the article. Regrettably, it is the case here. What the article says is regrettably sad. Whilst I am not educated enough to argue with the calculations, I know that the calculations quoted show that a different approach needs to be adopted to solve the imbroglio. A few uneducated suggestions were made by me in my response to Lord Desai in this paper a few days ago. It may perhaps be worth repeating them, yet again in the Churchillian fashion:- First, grant OROP forthwith on the terms already agreed upon. It does not behove a Government to go back on its promise. Second, laterally transfer all new retirees to CPMF/State Police forthwith to reduce pension burden, both defence as well as civil. Third, insutionalize National Service of one year for all college aspirants. This will at one stroke, provide better quality manpower for our dysfunctional services such as hospitals and other social sectors such as care for the aged and the armed forces as well as provide a degree of discipline to our future generations. The only hitch is that the politicians and bureaucrats will oppose it. Fourth, change the recruitment for officer cl by increasing short service commissioned intake to nearly 60%. This will not only reduce pensions but will also cut down of plenty in the middle ranks of armed forces and shortage in the junior ranks. For this to happen, the pay of armed forces officers will have to suitably increased and post armed forces tenure, such officers may have to be provided facilities for skilling themselves in good insutions. And lastly but most importantly, for the future, look before you lep. Brijesh
              Reply
              1. D
                Dr GS
                Aug 27, 2015 at 10:16 pm
                When Every basic detail has been already defined by the parliament twice, some pseudo intellectual and pseudo professionals are trying to Reinvent the wheel. Good carry on groping in the blind alley. oOur smmpathies with such novices !
                Reply
                1. P
                  pkpk
                  Aug 28, 2015 at 1:25 am
                  Dear Editor, your paper is so anti OROP to save money on military pensions. Here is a suggestion: Introduce compulsory military service for 5 years and also maintain professional military but half the size. Your pension bill be 50%. If the war breaks out those money calculating type will also be in front of Pak/Chinese soldiers in war and I don't think that as a patriot I should mention anything further. Since it is draft, your sons and wards may also have to serve Bharat Mata!
                  Reply
                  1. P
                    pkpk
                    Aug 28, 2015 at 1:26 am
                    Dear Editor, your paper is so anti OROP to save money on military pensions. Here is a suggestion: Introduce compulsory military service for 5 years and also maintain professional military but half the size. Your pension bill be 50%. If the war breaks out those money calculating type will also be in front of Pak/Chinese soldiers in war and I don't think that as a patriot I should mention anything further. Since it is draft, your sons and wards may also have to serve Bharat Mata!
                    Reply
                    1. P
                      pkpk
                      Aug 28, 2015 at 1:44 am
                      Dear Editor, your paper is so anti OROP to save money on military pensions. Here is a suggestion: Introduce compulsory military service for 5 years and also maintain professional military but half the size. Your pension bill be 50%. If the war breaks out those money calculating type will also be in front of Pak/Chinese soldiers in war and I don't think that as a patriot I should mention anything further. Since it is draft, your sons and wards may also have to serve Bharat Mata!
                      Reply
                      1. P
                        pkpk
                        Aug 28, 2015 at 1:23 am
                        Dear Editor, your paper is so anti OROP to save money on military pensions. Here is a suggestion: Introduce compulsory military service for 5 years and also maintain professional military but half the size. Your pension bill be 50%. If the war breaks out those money calculating type will also be in front of Pak/Chinese soldiers in war and I don't think that as a patriot I should mention anything further. Since it is draft, your sons and wards may also have to serve Bharat Mata! Please remember this suggestion next time you publish any editorial of this nature, though you have full freedom of expression of thoughts against veterans.
                        Reply
                        1. P
                          pkpk
                          Aug 28, 2015 at 8:17 am
                          Enjoy your freedom of expression against military personal who don't enjoy this fundamental right. Yours is the only newspaper, which is spearheading anti OROP campaign against veterans. Do you know something about family separation, army act, army courts, daily physical training, 10 mile run till 45 years and average lifespan 10 years shorter due to hardships if lucky to be alive?
                          Reply
                          1. P
                            pkpk
                            Aug 28, 2015 at 1:45 am
                            This newspaper is so anti OROP to save money on military pensions. Here is a suggestion: Introduce compulsory military service for 5 years and also maintain professional military but half the size. Your pension bill be 50%. If the war breaks out those money calculating type will also be in front of Pak/Chinese soldiers in war and I don't think that as a patriot I should mention anything further. Since it is draft, your sons and wards may also have to serve Bharat Mata!
                            Reply
                            1. P
                              pkpk
                              Aug 28, 2015 at 1:45 am
                              This newspaper is so anti OROP to save money on military pensions. Here is a suggestion: Introduce compulsory military service for 5 years and also maintain professional military but half the size. Your pension bill be 50%. If the war breaks out those money calculating type will also be in front of Pak/Chinese soldiers in war and I don't think that as a patriot I should mention anything further. Since it is draft, your sons and wards may also have to serve Bharat Mata!
                              Reply
                              1. P
                                pkpk
                                Aug 28, 2015 at 1:46 am
                                This newspaper is so anti OROP to save money on military pensions. Here is a suggestion: Introduce compulsory military service for 5 years and also maintain professional military but half the size. Your pension bill be 50%. If the war breaks out those money calculating type will also be in front of Pak/Chinese soldiers in war.
                                Reply
                                1. S
                                  Satish Ahuja
                                  Aug 28, 2015 at 5:37 pm
                                  Why my comments are not visible?
                                  Reply
                                  1. D
                                    dsg
                                    Sep 3, 2015 at 8:59 am
                                    What is my Opinion ? The article is nothing but and the names are just fake. Buying Nuclear submarines from saved pension fund ... wow what an analogy !!! Nobody will ask for OROP ... just let forces: retire at 60. give ured promotions like our baboo(n)s give NFSG ... Who is asking for for anything more ...? oh yes and let .. Civil Admin/Police do their JOBs and not call for Army every time they FAIL. DS Grewal
                                    Reply
                                    1. I
                                      Indian
                                      Aug 30, 2015 at 8:37 pm
                                      This article is given by a babu from finance ministry for publication in return for some leaked news given by him from ministry
                                      Reply
                                      1. Load More Comments

                                      Go to Top