There is considerable commotion in media over the rising defence pension outlay which has touched Rs 1.33 lakh crore. There are headlines like “General Rawat Favours Pension Cut, Colonial Bungalows to go Away” as if the two are connected and auction of colonial bungalows will supplement pension...
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The Truth about Rising Defence Pensions
Lt Gen Prakash Katoch
There is considerable commotion in media over the rising defence pension outlay which has touched Rs 1.33 lakh crore. There are headlines like “General Rawat Favours Pension Cut, Colonial Bungalows to go Away” as if the two are connected and auction of colonial bungalows will supplement pension bill, defence budget or money for managing cantonments – which will never happen as proceeds will go into union coffers as clarified by the defence minister, now heading Ministry of Finance (MoF). That being a separate issue, rising defence pension outlay no doubt is cause for serious concern.
The hullabaloo is more because of OROP. Not only was OROP granted in 2014 actually a one-time increment in pensions, the BJP-government has gone back on its promise of revision after five years, which was due in 2019. Grounds are being prepared to deny OROP altogether because the Supreme Court has set March 24 for final decision on OROP. Government has been portraying OROP as officer related issue which is obfuscation in the extreme. But what is the truth about rising defence pension outlay?
Ever wondered why the pension bill of civilian-defence employees is not mentioned separately in successive annual demands by the Ministry of Defence (MoD) and eventual allocation? The reason is deliberate – share of civilian-defence pensioners is very high despite smaller numbers compared to military veterans. In MoD’s annual Revenue Budget demands, salaries of Service Personal, Auxiliary TA and civilians are shown separately, but under Pensions, all categories are deliberately clubbed together. More ambiguity is created by stating civilian defence employees are on Natioanl Pension System (NPS).
NPS was to be implemented for civilian-defence employees from 2004 but there is large number pensioner who retired before 2004. Contribution during service remains 10% for NPS but government contribution was hiked from 10% to 14% of employee pay plus dearness allowance in July 2017 – GoI F No. 20/07/2017-PR signed by Under Secretary Abhay Garg in his letter to All India Defence Employees Federation dated March 18, 2019. The same letter of July 2017 also promised: payment of compensation for non-deposit of NPS contribution during 2004-2012; providing tax deduction to contributions made under Tier-II NPS up to 1.5 lakhs, and; increase in tax exemption for lump-sum withdrawal on exit from 40% to 60% making total withdrawal exempt from IT.
Civilian-defence employees have continued to enjoy NFU and those retiring before 2004 also received OROP with annual actualization, while military is denied both. All this meant higher pay and pensions for civilian-defence employees and larger government contribution in NPS, in addition to faster promotions. But expansion and upgrades were also engineered with cunning
Restructuring of AFHQ-CS under MoD was done by misrepresenting facts to government; posts of seven new principal directors, in addition to the four existing ones, and 36 new directors were sanctioned without any functional requirement expressed by the military. Army representation saying, “Creation of these unwanted/surplus posts is not only a violation of PMO’s directive on ‘minimum government and maximum governance’, but also a drain on public funds and recurring loss to the state” was ignored despite the restructuring also creating functional problems.
Defence Estate (DE), whose disbandment was recommended by CGDA in 2010 citing it most corrupt part of MoD, was empowered further and granted NFU with retrospect from 2016 by Defence Minister (now FM) Nirmala Sitharaman concurrent to her drive to take over defence land. Section Officer (SO) Entry was stopped by government in Central Secretariat Group B cadre in 2003 based on recommendations of a government-appointed committee. AFHQ-CS instead of discontinuing SO Entry, increased intake from 20% to 50% with AFHQ-CS officers attending meetings with DoPT and UPSC officials stating SO Entry is required by Service HQ without Service HQ even knowing about it. There were also reports that in these meetings sone AFHQ-CS officers faked as military officers.
41 Ordnance Factories have 200 plus Joint Secretary-level officers (Major General equivalent) while civilians in MES have 11 HAG-grade officers (Lieutenant General equivalent). Against 14.5 lakh Armed Forces personnel, there are 5.85 lakh civilian-defence employees – ridiculous ratio of 1:4 and on an average one serving or retired civilian-defence employee costs five times that of their military counterparts. MoD is loathe to reveal pension share of civilian-defence employees but considering the foregoing civilian-defence employees are likely consuming anything from 40% to 42% of overall defence pensions – civilian-defence pensioners being about 22% compared to some 78% military pensioners. MoD even spends more than Rs 1000 crore annually on pay and allowances of attached MoF personnel.
Yet the military is painted the villain and focus is on culling military veterans – even attacking categories of disability pensions while the CAPF, civil-defence employees and other government services continue to receive the same. The CDS is talking of increasing the service age to 58 which at best is stopgap with attendant pros and cons but who is to address the bloating civilian-defence budget?
Despite successive Central Pay Commissions and Parliament recommending transfer and absorption of military personnel after their military service into government organizations and departments where their unique skills, training, discipline and strengths can be optimally used, government has lacked the will due dependence on bureaucracy and obstruction by vested lobbies. The Defence Minister needs to take a call on this and alternatively examine establishing aan exclusive military veteran organization (MVO) for specific tasks. At the same time the Defence Minister would do well to examine this ridiculous ratio of 1:4 – 14.5 lakh military personnel against 5.85 lakh civilian-defence employees.
Combatizing civilian-defence employees is one option, the other being retiring military personnel at young age be given the option of TA-isation and serve in lieu of civilian-defence employees. MoF personnel attached with MoD earn deputation allowance and should be paid salary/ pension from MoF, not MoD. Moving the Department of Defence Production (DoPD) from MoD to the Ministry of Commerce and Industry has been projected by many scholars in the past. This has not happened because of the nexus between the MoD bureaucrats with the DRDO-DPSUs-OFB, because of which the governmental defence-industrial sector is in the current state with patchy success. Moving DoPD out would reduce the strain on the defence budget and improve efficiency. Similarly, with the CDS talking about veterans every second day, the Department of Ex-Servicemen (DESW) should be downsized and merged in the Department of Military Affairs.
The Defence Minister needs to stand up for the military for inclusion in Group ‘A’ services, NFU, allowances gone lower than CAPF, OROP and disability pensions. The belief that there will be no war has made the government look askance at the military. The J&K Allowance for military is far below that of CAPF and police. Same is the case of other allowances including the Siachen allowance vis-à-vis hazard allowance for CAPF/police at Leh or Guwahati – giving the impression that Armed Forces are considered necessary evil. Demonizing officers is downright idiotic given their proven record of sacrifices. Either NFU should be granted to Armed Forces or discontinued for other government services.
Recall in December 2017, Army Chief (now CDS) General Bipin Rawat had expressed alarm at apparent politicization of the Army saying that military should be kept away from politics. His statement held significance as 91.5% of officers engaged in counter-insurgency operations cited disgust for corrupt polity as a major reason for the slumping morale. The study ‘Psychological Aspects of Counter-Insurgency Operations’ published in the Armed Forces Medical Journal’ also said that 61.4% non-commissioned officers and soldiers cited the same reason for their low morale.
Veteran Major General Samay Ram writes in his book ‘Stress, Suicides and Fratricides in the Army’ that the “Army has to shoulder the main burden of not only containing the militancy but also of carrying out development work since the civil administration is either defunct or unwilling/reluctant to play its part of (sic) carrying out developmental work.”
Bearing down for cutting down on military’s pension must also be viewed in the backdrop of the move to hike pay 4-5 times of lower judiciary and the Prime Minister announcement in July 2019 of a Rs 3000 monthly pension benefiting three crore shopkeepers and traders who never retire and never cease to make profit many fold.
Little wonder a former Army Chief publicly stated that army is no more the preferred option for youth. Ignoring the ground truth would be tragic notwithstanding the rhetoric of a reporter asking a commander how is the josh and get the reply on expected lines that everything is tickety-boo.
