New Delhi: The Old Pension Scheme (OPS), which was discontinued across India by the Atal Bihari Vajpayee-led Bharatiya Janata Party government in December 2003 and replaced by the New Pension Scheme (NPS) from 2004, has become an albatross around the BJP’s neck, threatening to ruin the party’s poll prospects in many states, ThePrint has learnt.
The Union finance ministry told the Lok Sabha earlier this month that five states — Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh — had informed the Centre about their decision to revert to the OPS.
Of these, Rajasthan, Chhattisgarh and Himachal are under a Congress government, Punjab is governed by the Aam Aadmi Party and Jharkhand by the Jharkhand Mukti Morcha in alliance with the Congress and other parties. In Tripura, where state elections were held earlier this month, the Left Front has promised to bring back the OPS if voted to power.
Under OPS, government employees who have worked for at least 20 years get 50 per cent of their last drawn salary as their pension. There are no contributions made through this period, and the pension payments come due at the time of the employees’ retirement.
Under NPS, on the other hand, the government and employees contribute 10 per cent and 14 per cent of the employee’s salary, respectively, towards a pension fund. This pension fund is invested by the Pension Fund Regulatory and Development Authority in diversified portfolios. The idea is that these contributions would grow and so the government can use these funds to pay pensions when it needs to.
The RBI has in multiple reports flagged the fiscal imprudence of a return to OPS as it increases the central government’s liability manifold.
But the BJP is facing a strong push to bring back the OPS by its own leaders and allies in states such as Karnataka, Maharashtra, Madhya Pradesh and Haryana. The matter has especially gained urgency after the BJP lost the Himachal assembly election to the Congress last year. Restoring the OPS was a key poll promise of the Congress.
“We have apprised the high command of the fallout of the OPS. We lost power owing to government employees voting against us. This issue has created huge distrust. If we had announced a committee before the polls to address the OPS demand, things would have been different,” said Rajeev Bindal, former chief of the BJP’s Himachal Pradesh unit.
A senior BJP leader in Delhi admitted that “pressure is building on the party”.
“We have to choose between the devil and the deep sea. Pressure is building and the party has to see on what scale we can take a risk, and what happens to our other efforts such as PM-Kisan Samman Nidhi to swing public sentiment,” he told ThePrint.
The leader added: “We faced the challenge of farm loan waivers announced by the Congress (previously), which created an impact and we lost three state elections in 2018 (Rajasthan, Madhya Pradesh and Chhattisgarh). Now, OPS has shown its impact in Himachal. It was a small state where government employees were significant, and may be in larger states the issue will have lesser effect on our prospects, but it does have the potential to damage.”
The BJP has been attacking the Congress for announcing a return to the OPS, but party leaders from Madhya Pradesh to Maharashtra say “it (the strategy) is not working in favour of the BJP”.
“We know the concerns of employees and we have apprised the Centre about it. We are discussing the issue, but it is the central government which has to take the call on OPS,” president of BJP’s Madhya Pradesh unit, V.D. Sharma told ThePrint.
The central party leadership, however, maintains that OPS is a burden on the economy.
“The finance minister has specified on this issue. A few states, which are economically stronger may reintroduce it, but in the long run it will impact the financial health of the economy,” said BJP spokesperson Gopal Krishna Agarwal.
Also read: ‘Lauta do purani pension’: The steady growth of Old Pension Scheme agitations across India
Going against party line
On 9 February, while speaking in the Rajya Sabha, Prime Minister Narendra Modi had cautioned against “spending recklessly”.
“Look at the plight of countries in the neighbourhood. See how reckless borrowing has left those countries reeling under debt burdens. If we follow the same example and spend recklessly, as some states have done, thinking that the burden is going to be borne by the coming generations, then our country is also going to be ruined,” he said.
Last Monday, finance minister Nirmala Sitharaman asserted in Jaipur that funds deposited under NPS can’t be given to states for OPS. “If one state expects that the funds deposited with the EPFO (Employees’ Provident Fund Organisation) should be given to states… then, no,” she said.
Despite the warnings, many BJP leaders — especially in BJP-ruled, poll-bound states such as Madhya Pradesh and Karnataka — have publicly gone against the party line on the OPS.
Last week, former Madhya Pradesh minister Gaurishankar Bisen, while addressing employees during the state government’s ongoing Vikas Yatra in Balaghat, demanded implementation of the OPS even if the “party expelled him”. Assembly elections in Madhya Pradesh are scheduled to be held this year.
“The way a husband needs his wife in old age and wife needs husband, in the same way, old pension scheme is needed for employees. Take my voice to Delhi, give old pension to employees. It does not matter if the party expels me, but if you starve, it matters,” said Bisen.
Bisen’s demand comes at a time when Madhya Pradesh is in campaign mode and the rival Congress has already promised the restoration of OPS if it comes to power. State employees have been protesting for the old pension scheme — a demand that the Shivraj Singh Chouhan-led MP government shot down in the assembly last December.
Murmurs over the scheme are getting stronger in other BJP-ruled states as well, where leaders don’t want to upset the middle-class constituency.
In Karnataka, where election is due this year, BJP legislator Ayanur Manjunath last month joined a bicycle rally of retired state government employees demanding the return of the OPS.
“Elected representatives are getting pension which is similar to the OPS. If the government feels the NPS is so good, let it be extended to legislators as well,” Manjunath said.
In another BJP-ruled state, Haryana, where assembly election is due next year, Chief Minister Manohar Lal Khattar has also ignored the Centre’s cautionary words on the OPS. After a huge protest by the employee union Pension Bahali Sangharsh Samiti, the state has decided to form a committee to look into the OPS demand.
In Maharashtra, where the BJP is in alliance with the Balasahebanchi Shiv Sena, deputy CM Devendra Fadnavis, who is also the state finance minister, had stated in the assembly in December last year that his government had no intention of bringing back the OPS because of the financial burden it would bring.
Last month, however, Fadnavis said the state government “will discuss it (OPS) with finance and other departments”. CM Eknath Shinde has also said the state “is positive about the old pension scheme”.
The U-turn seems to have come after the rival Maha Vikas Aghadi (MVA) won three of five seats in the 30 January Maharashtra Legislative Council polls — the first elections in the state since a rebellion against the previous Uddhav Thackeray-led MVA government was brought down by the rebellion of a faction of Shiv Sena MLAs, led by Shinde, who then joined hands with the BJP.
‘Nobody buying financial burden theory’
There is a growing uneasiness among BJP leaders of the fallout of not addressing employees’ demand for restoration of the OPS.
A senior BJP leader from Maharashtra told ThePrint: “Attacking the Congress for provoking employees will not get any traction. Here, the beneficiary (of OPS) is not the opposition party, but lakhs of middle-class families. It is employees across India who are agitating to protect their pensions. Nobody is buying the future financial burden theory. We have communicated this to the high command. Ultimately, we have to protect our present politics and this issue can damage us if not resolved timely.”
Echoing his thought, a general secretary in Madhya Pradesh BJP said, “sooner or later, we will have to resolve this issue, whatever logic we give”.
Talking about the situation in Rajasthan, state BJP president Satish Poonia told ThePrint: “Whatever (CM and Congress leader) Ashok Gehlot promises, the situation here is such that people are waiting to bring the BJP to power. Law and order are dismal, there is unemployment and atrocities against women — all of which will work against the Congress. It is only with support from government employees that Gehlot can save his government. As far as OPS is concerned, we have apprised the Centre about this issue. They have to take the final call.”
The Bharatiya Mazdoor Sangh, a labour organisation and an affiliate group of the BJP’s ideological parent the RSS, has also demanded that the Centre restore the OPS.
(Edited by Nida Fatima Siddiqui)
Also read: States’ finances improving, but moving back to old pension scheme could pose future risks: RBI