It Doesn’t Make Fiscal Sense to Change the Fundamentals of the NPS!

  • The majority of the comprehending people would never question the intention behind introducing reformist measures that are so crucial for the advancement of any country. Unless such reforms are introduced keeping in mind the fast-changing times, any aspirational society would be struck where they are without ever realizing the potential of being counted amongst the best. Now, in a democratic country like India, where everything and anything is viewed under the prism of milking votes, introducing game-changing reformist measures is well nigh impossible. The opposition block, ever eager to put down the ruling dispensation on the mat, would leave no stone unturned to paint such reforms as anti-people.

PC: Dr Suman Kumar Kasturi

  • We have witnessed enough shenanigans on the matter. As you are aware, the country is perennially witness to one or the other form of election throughout the year. And this provides an easy opportunity for the political rivals to go hammer and tongs against each other with nary a thought about the well-being and progress of the country. Petty politicking is the order of the day even though some path-breaking reformist measures in the pipeline are opposed tooth and nail. Of course, the elections offer fertile grounds for populist, parochial, and sometimes much-needed reforms in equal measure. Unfortunately, opposing for the sake of opposing is the norm in the country’s political system.
  • Using every means to build pressure on the ruling dispensation is not new in the country. One such aspect is on full display right now. We know how political parties are supporting government employees’ demands for the reintroduction of the old pension scheme (OPS). A few states have already reintroduced OPS replacing the National Pension Scheme (NPS). Did someone say what about fiscal jurisprudence? What is that? FM Sitharaman recently announced the National Pension Scheme in Lok Sabha. A committee will be set up under the finance secretary to evolve an approach to balancing the needs of government employees without diluting fiscal prudence.

PC: Freepik

  • It was announced that the same will be designed for adoption by both states and the Union Government. No wonder, the announcement should ease the pressure on many state governments. NPS introduced two decades ago, was a reform to ensure fiscal stability. It moved incoming government servants from a guaranteed pension, OPS, linked to the last drawn pay to one which functioned on the lines of EPF for private sector employees in the organized sector. By the way, India’s informal sector employees have no meaningful old age protection of the kind linked to their peak income and are also indexed for inflation.
  • NPS also tried to create schemes to attract savings from unorganized sector workers to provide an old-age savings corpus – a very necessary provision. The fiscal fallout of guaranteed pensions is overarching. India’s labour force is dominated by the self-employed. It’s unfair to expect them to foot the bill of guaranteed pensions for a tiny fraction of the workforce. Some rethink on the move is warranted.

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Krishna MV
Krishna is a Post Graduate with specialization in English Literature and Human Resource Management, respectively. Having served the Indian Air Force with distinction for 16 years, Armed Forces background definitely played a very major role in shaping as to who & what he is right now. Presently, he is employed as The Administrator of a well known educational institute in Bangalore. He is passionate about sharing thoughts by writing articles on the current affairs / topics with insightful dissection and offering counter / alternate views thrown in for good measure. Also, passionate about Cricket, Music – especially vintage Kannada & Hindi film songs, reading – non-fictional & Self-Help Books, and of course, fitness without compromising on the culinary pleasures.