It has been over seven months that the 14-month-old Aam Aadmi Party (AAP) government led by Chief Minister Bhagwant Mann announced to revive the Old Pension Scheme (OPS) for more than 1.75 lakh employees, but its implementation is yet to see the light of day.
The reason: With the current whopping debt of Rs 3.12 lakh crore, the state seems heading for bankruptcy with the increased borrowings and also the freebies promised in the run-up to the recently concluded Assembly elections like free water and electricity up to a limit.
The latest spanner is that the Central government has slashed the state’s borrowing limit from Rs 39,000 crore to Rs 21,000 crore.
Amid the growing unrest among the employees over the inordinate delay in implementing the OPS, the government now appears to be buying time over legal and financial constraints of implementing the OPS.
The abnormal delay has given the opposition parties an opportunity to question its propriety.
Taking the lead, AAP rebel and Congress firebrand legislator Sukhpal Khaira said it has been more than six months since the Bhagwant Mann government issued notice to revive the OPS stopped since 2004 but there has been no further progress.
“Was it only a notification to procure votes for the AAP in Himachal Pradesh and Gujarat?” Khaira asked.
Joining the issue, state Congress chief Amarinder Singh Raja Warring has condemned the Central government for slashing Punjab’s borrowing limit by Rs 18,000 crore.
“Owing to the AAP government’s ill-conceived self-branding decisions, the BJP-led Central government has slashed Punjab’s debt limit which will only add to the state’s financial burden,” he said.
Officials with the state finance department admitted to IANS that the Centre’s step to slash the borrowing limit is mainly attributed to the government’s decision to opt for OPS, meaning that the state may stop contributing Rs 3,000 crore annually to the Pension Fund Regulatory and Development Authority (PFRDA) by reverting to the old pension.
The Centre has also stopped the grant of Rs 2,600 crore under the head of special assistance grant for development of capital assets and the grant of Rs 800 crore for the National Health Mission.
With an eye on the Gujarat Assembly elections, the AAP government in November last year hurriedly notified the implementation of the OPS in Punjab that aims to benefit more than 1.75 lakh employees, currently covered under the National Pension System (NPS).
In addition, 1.26 lakh employees are already covered under the existing OPS.
The government says the OPS scheme is expected to benefit more than 4,100 employees in the next five years alone. In order to ensure that the scheme being introduced is financially sustainable for the exchequer, the government will be contributing proactively to the pension corpus.
The contribution to the corpus will be Rs 1,000 crore per annum initially and will gradually increase. In addition, the current accumulated corpus with the NPS is Rs 16,746 crore, which the government has requested the PFRDA to refund but the Centre has declined.
Amid the tighter financial conditions and a worse than anticipated slowdown, the finance department officials are sceptical over the implementation of the OPS, saying it would put additional stress on finances as the state debt is close to 180 per cent of its annual budget.
They say the state is facing the daunting task to usher in much needed economic reforms as a major component of government earning and borrowing is meant for servicing debt rather than capital expenditure.
As per the state budget, the effective outstanding debt to the GSDP has been estimated to be 46.81 per cent in 2023-24.
Despite tighter monetary conditions, the state is annually providing a power subsidy of Rs 7,780 crore to domestic consumers and Rs 9,064 crore free power to farmers.
The AAP government, which stormed to power with a landslide win of 92 seats in the 117-member Assembly, is providing 300 units of free power per month to domestic consumers as per its pre-poll promise. Nearly 90 per cent of the state’s households are now getting zero electricity bills.
However, the party’s much hyped pre-poll announcement of Rs 1,000 to every adult woman, a big drain on the exchequer, is yet to see the light of day.
Angered over the bureaucratic hassles over mentioning the detailed pension policy, a section of employees unions, under the banner of the Old Pension Restoration Struggle Committee, have been demanding the timely implementation of the old pension scheme in Punjab.
They argued that the government’s notification regarding the implementation of the old pension “is just a political announcement” as it did not specify how it would do so and from which date the old pension is going to be implemented.
Employees of Punjab Roadways are not getting salaries on time. They say to create a vote bank, the government has extended free travel facilities to women but has not adequately compensated the roadways, resulting in huge losses.
An official familiar with the matter told IANS that political compulsions and populist announcements by the government have been taking a huge toll on the state’s finances and this may increase the debt beyond the projected Rs 2.52 lakh crore.
(Vishal Gulati can be contacted at gulatiians@gmail.com)
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