Tuesday, August 25, 2015

OROP - Time is running out - The Government must Act Fast!

Dear Readers,

BJP and Prime Minister Narendra Modi have all through been most supportive of the military needs. Even before coming to power, Modi had carved out his own niche of trust and camaraderie with the military personnel and the Ex-servicemen (ESM).  They are now, however, puzzled at the undue delay in implementing the OROP (One Rank One Pension) despite the unambiguous assurance given by the Prime Minister at various occasions including his declaration at Siachen Glacier on the eve of Diwali last year. The ESM (2.5 million) are now unhappy and suspect that the Babudom is misleading the Government on the issue of OROP which has been unequivocally been endorsed and approved by the Parliament, the Supreme Court and the Prime Minister himself. 

The PM declared on Aug 15 that the Govt had saved Rs 15000 cr in gas subsidy after enforcing direct credit system within last one year. It is also officially understood that 40% of food security bill (Rs 2.27 lakh crore this year) is intercepted by corrupt officials and never reaches the target beneficiaries. If this corrupt practice is reduced just by 10%, it will result in annual savings of more than Rs 23000 crore annually keeping the recurring budgetary increases in view. There is also enough scope to cut non-plan government expenditures in many other areas including unduly bloating perks and privileges of MPs and ministers.

The OROP bill has been estimated to be between Rs 8000 cr to Rs 9000 cr. Even if the Govt goes by the highly exaggerated estimates (Rs 12000 cr) being paraded in some media columns, it can still be easily funded from the aforesaid savings.

It is, therefore, abundantly clear that OROP is no extra financial burden on the national exchequer and the payout is very much feasible from within the available resources with the Govt. There is enormous money that needs to be raked in by cutting down the unnecessary "burdens" like subsidies, corruption, black money, rationalization of expenses in high offices and curtailing VVIP culture.
It is reliably learnt that Defence Minister Manohar Parrikar is fully convinced on the legitimacy and feasibility of clearing OROP soon. Prime Minister Narendra Modi has been all through inclined to clear the OROP and is also learnt to have ordered the Fin Min to tune in and remove all "technical hurdles" in the way without any further delay.

The QUESTION, however, remains: When is OROP going to be implemented? Lingering wait is dangerous as irate ESM go on Fast unto Death. There have been occasional threats of self-immolation and hanging from the trees at Jantar Mantar. How long will organisers succeed in dissuading ex soldiers and families of martyrs from taking these extreme steps? Even from within the Services, there are gloomy signals of simmering resentment and restlessness among the serving soldiers as well.

The time is running out. The Government must act fast.

Just heard about Col Pushpinder Singh's worsening condition in ICU.  I pray for his recovery back to good health.  I would also implore all others on 'Fast unto Death' to break their fast and await Government decision which hopefully should come soon.    

Best regards,
Karan Kharb
कर्ण खर्ब
उत्कर्ष The Turning Point 
(A Leadership Development Initiative)
Mob: +91 9818047092
Modi should ignore the naysayers on OROP - 
including the Fin Min

(R Jagannathan, published in 'First Post', Aug 24, 2015 12:34  IST)

If there is a worse way to handle a sensitive issue like OROP - one-rank-one-pension for the defence forces - I am yet to hear about it. The BJP has messed up big time on an issue that is not only very close to its own heart, but one that is long overdue.

Morally, politically and economically, Narendra Modi is making a serious mistake by unconscionably delaying OROP. Most arguments used against OROP are misleading, if not plain wrong.

First, when the previous government had already made a commitment on OROP and the then prime ministerial candidate had promised a full commitment to it in his election campaign, there was no way the decision could have been avoided. The only question that needed to be decided was when the scheme would be implemented and how OROP entitlements will be calculated. Two months was the maximum required after May 2014 for OROP to come into force.

Second, OROP affects the BJP's strongest constituency - the armed forces. As a nationalistic party, the BJP has drawn a disproportionate share of activists and politicians from the ex-servicemen's constituency - and this constituency is huge. The defence forces have 1.3 million serving personnel, another 1.2 million reservists, and many millions of ex-servicemen. And we are not even talking of other paramilitary forces like the NSG, the Assam Rifles, the Special Frontier Force and armed central policing forces like the CRPF, which has over 230 battalions of its own. Add them all and the numbers will surely double at least to around six million.If we assume an average household size of five people per serving or retired defence jawan or officer, we are talking of close to 25-30 million people who will gain from OROP now or in the future. Can the BJP mess around with the futures of such a large constituency?

Third, there is the economic argument. The finance ministry under Arun Jaitley would surely have argued that the fiscal deficit will go for a toss if OROP is implemented this year. But the cost of OROP is reckoned at anything between Rs 8,000-12,000 crore, depending on who you include and how you calculate the rate of pension. This amount would be less than one-tenth the food subsidy, where in fact 40 percent goes to the wrong people. It needs the government to only reduce food subsidy wastage by 10 percent to pay for OROP.

Even assuming the real payout will be twice as large, assuming we include all military and paramilitary personnel, including CRPF, we are talking Rs 25,000 crore. A big amount, no doubt, but not unaffordable to a government committed to cleaning up the wasteful subsidy system. Half the savings have already accrued from cleaning up the LPG subsidy system with the direct cash payments scheme.

An honest approach to the problem of fiscal deficit would have been a simple statement from the government that OROP will be implemented in two stages, with 50 percent of the target -ex-servicemen (the lowest-paid) being eligible from this year, and the other from next year. Alternatively, we could have covered all people upto 75 percent of OROP entitlements this year and 100 percent next year.

To have ex-servicemen on hunger-strike and a minister and former army chief's daughter backing their cause is a public relations disaster for the Prime Minister.

In any case, if the real issue is only the impact on central finances, there is also the counter-argument: when consumption demand in the economy is weak and business is not investing, a higher payment to ex-servicemen may be just the pep consumption demand needs.

It is an established fact that whenever public sector pay rises after the implementation of pay commission recommendations (the next pay commission's recommendations will have to be implemented from next year), consumer demand picks up and growth revives. In an economy that wants to raise its growth momentum and jobs, what can be better than an additional Rs 10,000-20,000 crore in the hands of consumers, thanks to OROP? And remember, higher demand leads to higher tax revenues from increased economic activity and hence lowers the fiscal deficit after a lag.

The economic argument against accepting OROP is thus weak. On the contrary, by sanctioning OROP our defence personnel will not only be defending our border better but also our economy.

The Prime Minister is probably getting bad advice from his finance ministry on OROP. He should over-rule them and announce OROP before Rahul Gandhi turns up at an ex-serviceman's home and offers fake sympathies.

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