UPA's farewell budget gives more pension to defence forces; here's what you wanted to know about One-Rank, One-Pension

New Delhi: In its interim budget, the UPA government has tried to address the long-standing demand of the armed forces by accepting the principle of "one-rank, one-pension" (OROP). Saying that the OROP was an emotive issue, with legal implications, Finance Minister P Chidambaram announced an additional Rs. 500 crore to the defence pension account for implementing the OROP scheme which will be effective from April 1. 

The scheme will benefit about 30 lakh personnels (24 lakh ex-servicemen and 6 lakh widows). In addition, the government has also given a 10% hike in the Defence Budget, giving more money for modernization of armed forces.

Interestingly, the government has so far been dragging its feet on the OROP despite a Supreme Court order and recommendations by Rajya Sabha Petitions Committee.

The government feared that this may have legal implications as similar demands may be raised from other Civilian Govt Employees. Following the announcement, several ex-servicemen and war veterans returned their gallantry medals.  

But as it goes to polls in a month or so, the UPA government through this announcement has tried to woo lakhs of voters from armed forces as the OROP has been a long-standing demand of the ex-servicemen. More than that, the UPA government has also snatched an agenda from the BJP which has been constantly raking up the ex-servicemen welfare issues. 

In fact, during a rally of ex-servicemen at Rewari on September 15, 2013, where Narendra Modi shared dias with former Army Chief Gen (rtd) VK Singh, the BJP’s PM candidate vowed to resolve the OROP issue if it comes to power. But before the BJP could make it a poll issue, Congress Vice President Rahul Gandhi on Friday announced his support to the OROP demand of ex-servicemen and promised to make it a reality, giving a clear idea of government’s thinking. By Monday, it was part of the interim Budget speech.

"This shows that the government is not only concerned about modernization of armed forces but also about their happiness factor.  This shows that the government is committed to the welfare of the armed forces," said Defense Minister AK Antony. 

"One rank, one pension" scheme will ensure that soldiers of the same rank and the same length of service receive the same pension, irrespective of their retirement date. As of now, retired personnel before 2006 get a lower pension compared to those of same rank retiring after 2006. 

Though the UPA government tried to bridge the gap by making changes in the pension rules for defence services in 2006, 2010 and 2013, but some gaps remained in the ranks of Sepoy, Naik, Major and above.

"We need a young fighting force, we need young jawans and we need young officers. We also need to take care of those who served in the defence forces only for a limited numbers of years. The government has, therefore, decided to walk the last mile and close the gap for all retirees in all ranks," Chidambaram tolf Parliament. 

Hailing it as a historic day, Rahul Gandhi said, "Our forces are always ready to fight for the nation and people. It is our duty to provide them all support. I thank the government, the prime minister and the Congress president for taking this historic step. Our government is fully behind them."

The amount appears to be too meager compared to the Ministry of Defence’s demand of Rs. 1,730 crore for the OROP implementation in 2014-15. Sources in the Defence Ministry said this was a token amount to begin the process. 

"In the coming week the entire contour of the scheme and its implication will be worked out. The political intent has been made clear by announcing a figure (Rs 500 crore). This amount is based on forecast made by Ministry of Defense based on initial estimates, hence, this is a provisional allocation. Given the sensitive nature of the announcement more money can be allocated and Revised Estimate will see more money going to the MoD in this account. Rs. 500 crore is a tentative amount," a Finance Ministry official said.

Defence budget

1. Rs. 2,24,000 crores earmarked for Defence. This accounts for 12.7% of the total central government expenditure for 2014-15.

2. This allocation of Rs. 2,24,000 crores represents a growth of about 10% over budget estimates/revised estimates last year.

3. Out of Rs. 2,24,000 crores, Rs. 1,34,412 crores have been allocated for Renuew and Rs. 89,588 crore for Capital, which include modernization related expenditure.

4. Defence outlay constitutes of 1.74% of GDP (estimated to be Rs. 128,39, 952 crores).