Bringing Back, Old Pension Scheme A Freebie, Says Montek

Former deputy chairman of the erstwhile Planning Commission Montek Singh Ahluwalia on Tuesday spoke against bringing back the old pension scheme (OPS), saying it is one of the biggest 'revadis'. Addressing an event organised by economic think-tank ICRIER, Ahluwalia said everyone talks about reducing the fiscal deficit but no one is suggesting methods of getting rid of certain expenditure.

"I think what the Prime Minister rightly called the revadis (freebies) of the world. There are many more revadis than we thought. "I mean bringing back the old pension scheme is one of the biggest revadis that are now being invented," he said. The old pension scheme, under which the entire pension amount was given by the government, was discontinued from April 1, 2004.

According to the new scheme, employees contribute 10 per cent of their basic salary towards pension while the state government contributes 14 per cent. The Punjab cabinet recently approved the reimplementation of the old pension scheme. The Congress has promised to restore the old pension scheme if voted to power in Himachal Pradesh.

Rajasthan Chief Minister Ashok Gehlot too recently said the old pension scheme should be implemented across the country and those saying it will put a burden on the exchequer are not right as it is all about financial management. Prime Minister Narendra Modi has in recent days hit out at the competitive populism of extending 'revadis' (freebies) which are not just wastage of taxpayers' money but also an economic disaster that could hamper India's drive to become atmanirbhar (self-reliant).

His comments were seen directed at parties like the Aam Aadmi Party (AAP) which have in the run-up to assembly elections in states like Punjab and Gujarat promised free electricity and water, among others. Recently, the Supreme Court had suggested setting up a specialised body to examine "irrational freebies" offered to voters during elections. Ahluwalia also said the Indian economy needs to grow at 8 per cent.

"We should stop focusing on whether the USA or Europe is in recession or not," he added. Speaking at the event, chief India economist at JP Morgan, Sajjid Z Chinoy said in the next 9-12 months, India will have to focus on macroeconomic stability. "India has built sufficient foreign exchange reserves, and there will be no 2013 like (taper tantrum) moment," he pointed out.

(PTI)