The implementation of one rank, one pension has pushed up the Centre’s defence pension payments by a record 40 per cent, posing fresh challenges to Union Finance Minister Arun Jaitley’s resolve to keep the Centre’s fiscal deficit within the budgetary target of 4.1 per cent of the Gross Domestic Product.
The armed forces pensions bill for the first six months of the current fiscal, from April to September, has turned out to be about Rs. 8,000 crore higher than for the corresponding period last year. Mr. Jaitley had provided only Rs. 1,000 crore for the whole year towards the scheme in the Budget he presented on July 10. The Finance Ministry is revising upwards its Budget estimate for the outgo on account of the scheme that benefits nearly 24 lakh pensioners of the armed forces.
The defence pensions bill for 2014-15 can be roughly expected to go up by about Rs. 6,000 crore over last year’s, the source said. The Budget estimated defence pensions during 2014-15 to be Rs. 50,966.95 crore as against Rs. 44,475.95 crore the previous year.
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The austerity measures do not cover pensions and the challenge for Mr. Jaitley will be to find fresh resources for the rapidly rising bill.
“Defence pensions payments normally do not go up so drastically. Though some increase was expected on account of the new scheme, the rise is turning out to be manifold,” the source said.
One rank, one pension means soldiers of the same rank and the same length of service get the same pension, irrespective of their retirement date.
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The decision to implement the scheme was first announced by former Finance Minister P. Chidambaram in the UPA government’s interim Budget he had presented in February this year. Mr. Chidambaram had allocated Rs. 500 crore for it. “This decision will be implemented prospectively from the financial year 2014-15,” he had said while presenting the vote on account ahead of the elections.