Following article is published in Business Standard (Link at the bottom)
It is to be noted that the governments of five states -- Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh -- have informed the Centre about their decision to revert to the old pension scheme.
PM Narendra Modi during his Rajya Sabha address on Thursday warned the states of the economic crises in neighbouring nations. In a possible mention of the Old Pension Scheme, which has been readopted by some of the states recently, PM Modi said political parties should be thoughtful about its steps and shouldn't be toying with the future of the country's children. He said the states should be financially disciplined.
"We, in our policies, have kept national progress in mind and have also addressed the regional aspirations," PM Modi said on Thursday while replying to the ‘motion of thanks’ debate on President Droupadi Murmu’s address in Rajya Sabha. “The perfect combination of national progress and regional aspiration has been visible in our policy,” he added.
In a written reply in the Lok Sabha, Bhagwat Karad, Minister of State for Finance, said as per RBI's report titled 'State Finances: A Study of Budget of 2022-23', the annual saving in fiscal resources that reversion to the old pension scheme entails is short-lived.
He said that by postponing the current expenses to the future, states risk the accumulation of unfunded pension liabilities in the coming years.
"The state governments of Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh have informed the central government/Pension Fund Regulatory and Development Authority about their decision to restart Old Pension Scheme for their state government employees," Karad said in his reply.
He added that there is no provision under the Pension Fund Regulatory and Development Authority (PFRDA) Act vide which the accumulated corpus of the subscribers, viz governments' and employees' contribution towards NPS along with accruals, can be refunded and deposited back to the state government.
The Reserve Bank of India (RBI) too had cautioned states against reverting to the Dearness Allowance-linked old pension scheme, which was in place till 2004. The central bank said that it will add to the fiscal burden of states in the coming years.
The old pension scheme was first discontinued by the BJP-led NDA government in December 2003. The new pension scheme was adopted on April 1, 2004.
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