In a strongly-worded rebuttal, Finance Minister Nirmala Sitharaman rejected Congress party allegations that the proposals put out by the government on the Unified Pension Scheme (UPS) is a “U-turn” in terms of policy. Her response underlines the rising political tensions as the government forges ahead with its agenda before elections in Jammu and Kashmir, Haryana, Maharashtra, and Jharkhand.
The Unified Pension Scheme: Not a Rollback
Sitharaman hit hard to defend UPS, saying the scheme was nowhere near reverting to the old pension scheme that was in force until the advent of NPS in 2004 but, however, signified a substantial upgrade over the existing NPS. “It is not a rollback. It is different from OPS and NPS. It is clearly a new package. UPS is better and will satisfy most government employees,” she said, attacking the Congress party for misreading the proposal.
The Finance Minister would also substantiate her claims in the backdrop of growing attacks from Congress party high command and leaders against the ruling BJP. Last week, Congress President Mallikarjun Kharge, among others, went about reinforcing the “U-turn” programming; cases where the Modi government was forced to reverse critical policies and programs because they were not received favorably in the public sphere. What makes the above exercise more salient is the fact that social media handles of the Congress party have been relentlessly hammering this line. This, even though it is not making a splash.
The political context: Congress versus BJP
This sequelae is beyond a matter of pension reforms—it’s just a display of the larger political battle between the BJP and the Congress, especially with state elections in the offing. Very well aware that Congress harped on how it would restore the OPS in Himachal Pradesh in 2022—a poll that brought a strong victory—BJP is pushing back to ensure that the pension issue does not become a remembered rallying point in the upcoming poll.
And, how Sitharaman’s reply to the criticism went more than just saving the face of UPS but throwing light on the vulnerabilities of the Congress Party. She said the opposition had degraded itself now to a “naara-driven or sloganeering-driven party” and the BJP was about “flexible and choice-driven governance”. She elaborated what the Finance Minister was trying to say: these UPS solutions fully value grave concerns of government employees and, for that matter, the larger populace, much better than from OPS.
The Economics of Pension Reform
At the bottom line, in essentials, what this debate churns around basically is economic sustainability. While OPS, in vogue prior to 2004, guaranteed 50% of the last drawn salary of an employee as pension without requiring any contribution from the employee, NPS — introduced by the Atal Bihari Vajpayee government — takes care of a pension linked to contributions made both by the government and the employee, hence it is less financially onerous on the state exchequer.
On the other hand, the NPS has been criticized for being too market-return dependent and therefore the retirees could not be assured. The UPS tries to stand at the middle since it guarantees a minimum of ₹10,000 pensions for the retired, yet the employees and the Government are supposed to make the contribution. In this new plan, some features of OPS are carried over, such as the assurance of 50% of the last drawn basic pay as a lifelong benefit, but with a more contributory structure.
While the BJP’s stand is that the UPS is a logical progression of the pension policy, which balances the compulsions of changing economic realities while caring for the interests of government employees, the Congress has latched on to the potential pitfalls of the new scheme to argue it is a step backward for them.
What now : appease the political oppositions
Pension will be another contentious issue in the upcoming state elections. The BJP has been obviously trying to position the UPS as a policy that weighs its steps between fiscal prudence and social welfare, and the Congress is using it to raise a doubt over the capability of the government to be trustworthy and constant.
There’s a lot at stake for the BJP. In effect, if it cannot defend the UPS and make the voters believe in its suitability as a more prudent path compared to going back to the OPS, then that would jeopardize its continuous electoral supremacy.
It further indicates the high political costs of the matter at hand, providing a backdrop Sitharaman used to deliver her scathing response to the Congress claims of it being another “U-turn” by the Centre. With the election cycle already heating up, expect this pension issue to continue to be a taunt in the broader fight between the BJP and Congress for control over the narrative.
High Stakes Battle on Pension Reform Continues
The issue of the Unified Pension Scheme heats up as state elections draw near. The BJP and Congress are locked in a fierce contest, each trying to position themselves as the best steward of the country’s finances. With state elections on the horizon, both parties are ramping up their rhetoric, and the pension debate is rapidly becoming a central point of contention. The results of the battle will, therefore, effectively shape the political landscape, with the electorate keenly watching how each party handles the very sensitive issue of pension reform.
