ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Military's Manpower Costs

Reality Bites

The financial implications of the "one rank, one pension scheme" for the armed forces, and other associated issues, are quite startling. Even if the government must accept the scheme, having committed itself to it, the issue of its financial burden and the underlying policy assumptions cannot be sidestepped. This article looks at some of the wider financial, political and administrative implications of implementing OROP.

The outcry over “one rank, one pension” (OROP) for India’s armed forces raises several issues other than those of honouring pledges made to soldiers or ensuring that they are paid their “deferred wages” expeditiously and fairly. While political parties are eloquent about the fairness of the demand, when in power, the issue gets stuck in basic questions. None other than the Prime Minister observed that there are “too many definitions (of OROP) going around yet, and we are looking for one on which all stakeholders agree” (Tribune 2015a). Union Minister of Defence Manohar Parrikar said that “the entire debate (over funds required for OROP) varied from Rs 500 crore to Rs 22,000 crore” (Hindustan Times 2015). Union Finance Minister Arun Jaitley spoke of Rs 6,000–8,000 crore needed for defence pensions, whereas the Controller General of Defence Accounts spoke of needing Rs 14,200 crore (Tribune 2015a). Taking these three statements at face value shows that the Bharatiya Janata Party (BJP)-led government, quite like its predecessor, the second Congress-led United Progressive Alliance (UPA-II) government, has made a commitment that it finds difficult to fathom and/or meet.

Manpower costs are also eating into the capital allocation of the armed forces to cover revenue demand. For instance, the Ministry of Defence (MoD) shifted Rs 13,000 crore from the capital side in the 2014–15 budget to the revenue side to meet day-to-day expenses. This was the second time this was done. In January 2014, Rs 7,870 crore was moved from the capital to revenue account by the UPA-II government to take care of additional revenue requirements (Tribune 2015a).

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