Pinching pensions

It is an admissible fact that the national exchequer is under an undesired financial burden. Apart from salaries and allowances that have an annual cost tag of around Rs2 trillion, pensions account for another one trillion rupees, approximately 1% of GDP. This staggering bill in a budget of Rs18.7 trillion means a lot, and comes on the heels of an inherent Rs6 trillion annual deficit. Thus, the government's intention to do away with this pestering backlog on revenue for people who join the workforce from the next fiscal year is a welcome development, and is in sync with the recommendations of donor agencies as well which want to see a vibrant and small size of bureaucracy and pensions. The reforms will, thus, see the new employees share a part of their remuneration as 'defined contribution', called self-funded scheme, and will work throughout their career with a promising saving of their own along with state emolument as destined by law.

The reforms on pensions and pay-scales, nonetheless, are half-baked and are in need of a professional and modernised perusal. At the moment, there are more than 1.3 million state employees who, by virtue of coming full circle, land in the pension zone, and to add to this are veterans from the armed forces. The new regulations are also applicable to new entrants in the armed forces as the government's reformative measures correspond to the military's own agenda of coming up with a helping hand to cut down on expenditures. It goes without saying that the private sector which constitutes more than 80 percent of the economy is on its own, and men completing their career are seen as more well-off than those being pampered by the state.

This necessitates some new arithmetic to amend and adjust the pay structure of government employees, and also to plough out corruption for good. Another observation of our workforce is that sectors where the government has reduced its involvement have churned laurels and are not a liability anymore. While pensions are part of old-age benefit scheme, they are in need of being tuned on modern economics.