After three states—Chhattisgarh, Jharkhand and Rajasthan—reverted to the defined-benefit Old Pension Scheme (OPS), Punjab is now considering doing the same.

OPS had been replaced by the defined contribution National Pension System from April 1, 2004 to reduce the financial burden of the Centre and the states.

The overall pension liabilities of states have risen to Rs 4.07 trillion in FY22 from Rs 2.27 trillion in FY17, and pension expenditure accounts for one-fourth of states’ own-tax revenue.

With increasing pension expenditure, liabilities of states are going to rise further. Punjab’s debt-to-GSDP has risen to 53% in FY22 from 43% in FY17.