Reckless Populism: Ashok Gehlot Restores Old Pension Scheme For State Government Employees

Rajasthan Chief Minister Ashok Gehlot, who also holds the portfolio of Finance Minister presented the state budget yesterday (23 February) which was full of populist announcements. These included Rs 800 crore worth MGNREGA-like scheme for urban areas aimed at providing 100 days of employment in urban areas, extending existing MGNREGA from 100 days to 125 days with state government bearing almost Rs 700 crore expenditure for additional days, increase in health cover from Rs 5 lakh to Rs 10 lakh per family in a year under state’s health insurance scheme, electricity consumption related subsidies worth Rs 4,500 crore, conducting REET exam in July (which was cancelled due to paper leak) with increased vacancies from 32,000 to 62,000 posts, a cellphone for women heads of 1.33 crore families with three years of internet connectivity, etc.

But the biggest announcement was restoration of the old pension scheme for the state government employees who joined on 1 January 2004 or later.

“We all know that the employees associated with government services should feel secure about the future, only then they can make their invaluable contribution towards good governance during the service period. Therefore, I announce to implement old pension scheme from the next year for all the employees appointed on or after 1 January, 2004. Bringing back the old scheme is a historic decision. The then Union government might have brought the NPS for some strong reasons, but we need to consider it again,” Gehlot said.

Atal Bihari Vajpayee-led NDA government had taken a historic decision in nation’s long term interest to discontinue pensions for government employees from 1 January 2004.

There are estimated to be around four lakh government employees who will benefit from this move. For 2022-23, Gehlot has budgeted over Rs 24,000 crore for pensions, a sum that’s increasing every year, though not as fast as the amount under salaries (over Rs 66,000 crore for 2022-23). Still, the expenditure on pensions is almost nine per cent of total revenue expenditure of Rajasthan government and enough to bring down the revenue deficit of the state to zero.

Moreover, employees who actually stand to benefit will start getting paid pensions long after CM Gehlot has left office (employees who joined in 2004 or after will retire in mid-2030s).

Apart from this, Gehlot also reversed previous BJP government’s decision to cut the salaries of employees. This restoration of the next grade pay system will further burden the exchequer by Rs 1,000 crore from the upcoming fiscal.

Gehlot estimated revenue expenditure for 2022-23 fiscal to be Rs 2.38 lakh crore and revenue receipts to come at Rs 2.14 lakh crore.