Pension cost cut top on military agenda

Chief of Defence Staff Bipin Rawat and the three service chiefs are in intensive discussions on reducing the burgeoning pension cost to the exchequer by gradually increasing the retirement age of some non-combatants, prioritising hardware purchases and generating internal resources for military housing in cantonments.

With the military pension budget amounting to Rs 1.33 lakh crore, or 0.5% of gross domestic product, in fiscal 2020-21, from Rs, 41,000 crore in 2010, and Rs 6-7,000 crore of expense looming in June for the equalisation of pension under the One Rank, One Pension (OROP) scheme, Gen Rawat is learned to be in favour of increasing the retirement age of certain classes of non-combatants and medical staff to 58 years from 39 to cut the bill.

In 2019-2020, the pension bill amounted to Rs 1.13 lakh crore.

Although the military top brass is still to come to terms with the proposal on concerns that it will lead to a greying force, Gen Rawat’s move could entail a longer stint in service for around 400,000 non-combatants, saving around Rs 4,000 crore in pension cost. The plan includes retiring 60 non-combatants in each of the 450 infantry battalions at the age of 58 and the same applies to armoured regiments. The increase in the retirement age to 58 is expected to be gradual.

Reforms also loom in the military housing sector with colonial bungalows giving way to future vertical housing with the armed forces generating their own resources to fund these projects. Called the “New Moti Bagh Model”, the CDS wants infrastructure agencies like the National Highways Authority of India (NHAI) to fund military housing projects (as per military specifications and under its monitoring) in lieu of compensation for acquiring cantonment lands.

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The Hindustan Times
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