India to go bankrupt by 2030 if old pension scheme is implemented: Haryana CM

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Haryana Chief Minister Manohar Lal Khattar has spoken about the drawbacks of the Old Pension Scheme (OPS) citing a ‘WhatsApp’ message. The Chief Minister said: “Yesterday I received a message on Whatsapp in which a central government official said that if the Old Pension Plan (OPS) was implemented, the country would be bankrupt by 2030.”

Furthermore, Khattar said that in 2006, former Prime Minister Manmohan Singh also opposed the Old Pension Scheme. “Manmohan Singh is a great economist and he said in 2006 that the Old Pension Scheme will take India backwards as the vision of the scheme is myopic,” Khattar said.

The Reserve Bank of India also recently issued a note of caution on the reversion to the old pension scheme by some states, saying it represents a significant risk in the “subnational fiscal horizon” and would lead to the accumulation of unfunded liabilities in the coming years. for them.

Earlier, the governments of Rajasthan, Chhattisgarh and Jharkhand informed the central government and the Pension Fund Regulatory and Development Authority (PFRDA) about their decision to restart OPS for their employees.

On 18 November 2022, the Punjab government has also issued a notification on the implementation of the OPS for the state government employees who are currently covered by the NPS.

In 2004, the federal government introduced the National Pension System (SNP), a defined contribution pension plan that replaces the old pension plan.

Under the old pension scheme, employees get a defined pension. According to this, an employee is entitled to an amount of 50% of the last salary collected as a pension.

However, the amount of the pension is contributory under the National Pension System, which has been in force since 2004.

Several economists have also expressed concern about returning to PAHO, saying it would put pressure on state finances.

Former Vice President of the former Planning Commission Montek Singh Ahluwalia recently spoke out against bringing back PAHO, saying it is one of the biggest ‘revadis’.

For 2022-23, the RBI report said states have budgeted for an increase in revenue spending, mainly led by non-development spending such as pensions and administrative services.

Budget allocations for medical and public health and natural calamities have been cut, while spending on housing has been increased, the RBI report mentioned.

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