Fiscal space available to absorb OROP scheme without impacting fiscal deficit target: Jayant Sinha

NEW DELHI: The government on Monday said it has the “space” to absorb the burden of Rs 8000-10,000 crore on account of One Rank One Pension ( OROP) and that it would not hurt its fiscal consolidation programme.

“We have the fiscal space to be able to absorb this without having any impact of the fiscal deficit target, which is 3.9%. So, we have taken that into account as we have prepared the OROP scheme,” Minister of State for Finance Jayant Sinha said.

The government had last week announced that it will implement OROP under which a uniform pension would be given to armed forces personnel retiring at the same rank with the same length of service. The scheme would be implemented from July 1, 2014. Funding the OROP, the minister said, was never a consideration, but the government took time in finalising the scheme as it wanted it to be “equitable and not halfbaked”. Sinha said the actual payout in arrears for implementation of the scheme from July 1, 2014, as well as the recurring burden are being worked out. For the current year, the outgo is estimated at Rs 8,000-10,000 crore, he said.

“We are estimating that cost would be Rs 8,000-10,000 crore at present and it would increase further in future... It is a recurring number. The Rs 8,000-10,000 crore is in this fiscal and there are of course arrears which have to be paid,” he said. Under OROP scheme announced on Saturday, the pension for defence personnel would be revised every five years.