Has the Armed Forces pension bill become unaffordable?

In 1984, a High Level Committee headed by the then Rajya Raksha Mantri Shri K.P. Singh Deo was set up which conducted thorough study of the problems of ex-defence personnel for the first time. It made more than sixty recommendations. All except two were accepted by the government. And these two were: ‘One Rank One Pension’ and assured employment to the veterans. It is more than a coincidence that these were the two issues which hurt us the most. Since then, during the last 31 years, successive generations of ex-servicemen have been knocking at the doors of the government for a favourable verdict. When faced with the polls, all parties vow to implement OROP, but they put it on the back burner as soon as they settle down in their coveted chairs. The reason which they give is the same: the government can not bear the financial implication. Recently, a few of my friends decided to make a dispassionate analysis of this with the figures that are available on the Internet. The result of our analysis is given below. As of now, the government is committed to implement OROP, but the process of going through the arithmetic is causing the veterans to become restive, and even entertain misgivings.

We, the people of India gave unto ourselves, a constitution on 26 Jan 1950. But at the same time, we had inherited a strong bureaucracy, which has been described as the ‘steel frame’ by no less a person than Sardar Patel, the first Home Minister of India. These descendants of the ‘Heaven Born’ members of the Indian Civil Services (ICS) are obsessed with status. It has been said that our civil servants will “continue to try to maintain status-quo even if status becomes irrelevant” Way back in 1986, they ruled that no Brig could draw even a paisa more than the starting pay of a Joint Secretary, who was functionally equivalent to Major General. This led to much heart burning and some court cases.

The current impasse on OROP reminds me of a Tamil proverb which reads : 

Kaṭavuḷ koṭukkum pūcāri nāṉ atai eṉ ceyvēṉ eṉkiṟār   (God gives but priest says, I will not let you have it!)

And so, the veterans will have to wait until the ‘Priest’ condescends. Ever so often, we see light at the end of the tunnel, but it turns out to be the headlight of an approaching vehicle!!! 

I sent a draft of this paper to a few friends and colleagues. The comments received from them are given at the end of the post. I would like to invite your attention to two of them. One has come from Dr Prakarsh Singh. He holds a PhD from the London School of Economics and is now on the Faculty of a prestigious university in the US. The other is from Mr JN Amrolia, who headed the HR in Ashok Leyland for a record period of well over two decades.

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The lead story in a national daily has made a fervent plea for a debate on military pensions. The plethora of figures given in the editorial published in the Indian Express on 09 March 2015 has obviously been ‘planted’ by someone in the ministry, since they are not available in the public domain. The subject must indeed be discussed, since it affects a large section of people, but the statistics must be seen holistically and viewed in the right perspective.

As per the Internet, the population of our country in March 2015 has been estimated at 1278 million. The total number of soldiers, sailors and airmen on active list is reported to be 1.3 million. These two figures reveal that the number of combatant personnel for every 10,000 Indians is 10.17. This ratio is a lot higher, in other countries. The figures are: India 10.17; Pakistan 37.1; USA 47; Russia 59; China 17; Sri Lanka 75; Iran 65 and Israel lead the pack with a figure of 214! These statistics reveal that a tax payer in our country has to support the least number of soldiers.

Let us now compare this proportion with the situation as it obtained in our own country 35 years ago. Our armed forces were comprehensively re-structured and expanded after the 1962 debacle, but their strength levelled off at a figure of around 1.25 million by 1981. Our population at that time was 683 million. The resultant per capita ratio works out to 18.3 military personnel for every Indian. Thus, in the last three decades, the number of soldiers for every 10,000 Indians has dropped to 55% of this figure..

For those who have an aversion to statistics let us put it in words.  Our country has a very large population. But the size of our military is not as big. Therefore, our people have to pay less to pay the soldiers. Further, during the last forty years, the population has more than doubled. But the size of the military has not been increased. Consequently, our defence spending on a pro-rata basis has been reducing slowly, but surely.  

The ratio of pensioners to serving personnel in India is, indeed, a matter of great concern. This truth had been comprehended as early as 1983, and a series of studies were ordered by the Army Headquarters to arrest the trend. To maintain a youthful age profile, combat soldiers have to be retired in the prime of their lives, and that bloats up the number of pensioners. The service headquarters have written innumerable papers on this subject. In fact if all the files that were created on this issue had not been destroyed, there would be no place left for anyone to sit in concerned sections of the Ministry of Defence. Almost all the thinkers came to the conclusion that the only solution to this problem was lateral shift of soldiers to police and Para-military forces. Unfortunately, this impinges on the cadre structure and promotion prospects of the worthy officers currently heading these forces. Consequently, all these meticulously conducted studies were first shelved and later consigned to flames. The incinerators in South Block are so effective that even the ashes are destroyed, so that posterity does not get a wind of these prickly suggestions. The military top brass are not alone in suggesting lateral absorption of soldiers into other departments of the government. Successive Pay Commissions have recommended that ex-servicemen be absorbed into police and Para-military forces. My friend, J Thomas feels that ex-servicemen be given the necessary skills for them to be laterally shifted to Defence establishments like the DGOF, MES, and defence PSUs. As a rule, five years military service should be a pre-requisite for a job in all defence establishments.

 The Sixth Central Pay Commission devoted a full chapter (Number 2.4 of their Report) in which they gave details of how lateral absorption should be carried out. Towards this end they even went to the extent of abolishing the pay group structure of the armed forces, so that lateral shift would not lead to a loss of pay. During implementation of the report of the 6^th CPC, the government is believed to have stated that ‘this issue will be examined at a later date’.  And of course, that ‘later date’ never came, and as of now, the problem continues to stare at us, and show its ugly face whenever we look at the pension bill.

Let me mention here that the loss of job in the prime of life leads to loss of earning potential. In addition, it results in a person denied the opportunity to work, and therefore feel ‘needed’. Even the family does not value a man who is idle, and seen hanging around the house all day long. There is no punishment greater than being unemployed, with no skill to sell! The pension is small consolation and a poor substitute for work.

We now turn to another issue which is related with this subject. Between 1991 and now, a great deal has happened to our economy. When we were children, food was the main concern. The Second Pay Commission (1957-59) devoted a considerable part of their report in devising a ‘need based’ pay as the minimum wage to ensure that the humblest paid government servant could afford to provide 2700 calories of food recommended by Dr Aykroyd to his family of three. This factor became the corner stone of their report.

The economic situation has undergone a sea change since then. Our GDP has been rising at healthy pace especially after 1991, and goods and services which were the exclusive preserve of the rich and the mighty are now in the reach of even the lower middle class in India. Merely thirty odd years ago, a residential telephone was a luxury. In the army only officers above the rank of Colonel were entitled to a phone in their residence, and that too, without the ‘trunk dialling’ facility. Today, even an unskilled daily wage earner owns a mobile phone.

The improvement in the quality and supply of these creature comforts by way of ‘white goods’ is similar. The soldier is an integral part of the society. Therefore, if a neighbour has fancy smart phone, and our man cannot afford it for his child, he feels belittled. There is enough evidence to suggest that the size of the national cake has increased. The basket of goods and services which constitute the shopping list of the householder has undergone a sea change. The compensation package has to cater for this fact of life. Or, as my friend K Aggarwal puts it, ‘If the size of the national cake has increased, then the soldier and also the veterans are justified in seeking a larger slice. In all fairness, this should not be denied to them’

Philosophically, I observe that life was a lot simpler when we were children. Our needs were limited to ‘roti, kapda aur makaan’. Today, if a person does not have a cell phone for a few hours, he might die of asphyxiation!

To sum up, let me state with full conviction that compared to other countries, our per capita soldiers are much less in number. To help them give of their best, it is our bounden duty to provide them the means to buy all that they need to live with grace and dignity. There is a crying need to review the terms of engagement of the soldiers to bring the number of pensioners down. I am convinced that it is possible to do so, if the government has the will. The ground work for this has already been done by the 6^th Pay Commission. The MHA and the MoD have to shed some of their unfounded reservations to implement this highly overdue reform.

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An Addendum

I was about to send this piece out when I discovered some interesting facts. I found that soon after our independence, defence received a much larger share of the national budget than now. In Feb 1951, Shri CD Deshmukh presented a budget in which the total expenditure was estimated at Rs 375.43 crores, of which defence was allocated 180.2 crores. This works out to about 48% of the government spending. It is interesting to see how the parliament looked in those formative years of our fledgling nation.

 This year, in 2015 Shri Arun Jaitley has granted 2,46,727 crores to defence out of the total expenditure of Rs 17,77,477 crores. That is 13.8% of the total outflow. Therefore, those who believe that defence was neglected during the early days of our republic are mistaken. Defence is, in fact, receiving a raw deal now!  Simultaneously, have a look at how the parliament looks now. Notice the all round improvement in the standards of everything in the picture: the furniture, the tapestry, the attire of the Members of Parliament and their demeanour. Sixty years ago, one could not hear what they spoke in the ‘House’. Today, one can see them live on the Television! 

From these statistics, I also derived some more inferences. Assuming that the budgetary figures have a direct relationship with the GDP, it can be seen that during the last 64 years, our national income has increased by a factor of about 4740 times. Now, since prices of essential items such as food grains, sugar, milk, cloth and building materials have risen by a factor of 100 during this period, the actual increase in the size of the national cake at fixed prices is of the order of 47.4. Since the population of the country has gone up from 36 crores in 1951 to 127 crores now, it is evident that the average Indian today has at least 13.4 times more money to spend than his grandfather, six decades ago. And this fact does not really need all this statistical analysis. Just take a good look at all the vehicles you see on the road and then go into a shopping mall. Compare the goods and services you see there and then recall what we possessed when we were children.

Now, take a look at the defence budget. View it in the light of the revenue of some of our major corporate houses. You will find that the annual turnover of several companies exceeds our defence spending. If you add the net worth of just two Indians, Mukesh Ambani and Azim Premji, you will discover that it exceeds the budget of our army, navy and the air force! Notwithstanding all these inequities and anomalies,  I am sanguine that our men in uniform will discharge their duties with utmost commitment, always and every time. They abide by the oath administered to them at the time of their entry into the service.

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Life has a funny way of springing surprises on us. I have just received the following signboard, which may come as a shock!

DUE TO ECONOMIC REASONS, THE LIGHT AT THE END OF THE TUNNEL

HAS BEEN SWITCHED OFF!