OPS move brings Himachal on brink of financial crisis as state reels under Rs 74,622 crore debt

Shimla: With even the Congress Party’s former deputy chairman of the planning commission, Montek Singh Ahluwalia, terming the move to restore the Old Pension Scheme (OPS) as ‘disastrous’, all eyes are on how Himachal Chief Minister Sukhwinder Singh Sukhu will fulfil the Congress’s biggest election promise as the state is facing a financial crunch.

Himachal Pradesh is reeling under a debt burden of Rs 74,622 crores as per latest figures shared by Deputy Chief Minister Mukesh Agnihotri in the state assembly last week.

The government employees in Shimla have already started lobbying to see that the Congress fulfils its promise to restore the Old Pension Scheme—which had been its most potent weapon to dislodge the incumbent BJP government.The employees unions met Chief Secretary Prabodh Saxena on Monday and asked for an early decision.

The Congress had promised that the OPS decision would be taken in the first meeting of the cabinet within 10 days of its returning to power.

Sukhu finally managed to form his cabinet on Sunday—almost a month after taking over as Chief Minister. He is yet to allocate the portfolios to the ministers, five of them already in Delhi—where Chief Minister is camping to get the Congress high command’s stamp of approval for the portfolios.

While the debate on OPS, both within the state and outside, has already heated up, Montek Singh Ahluwalia has warned that states reintroducing the Old Pension Scheme may go bankrupt.

In the words of Ahluwalia the move to the old pension scheme was an “absurd idea” and a “recipe for financial bankruptcy”.

Yet , Chief Minister Sukhwinder Singh Sukhu has his own views on the issue.

“It’s our solemn commitment to grant all benefits of OPS to the employees. We know how and from where the resources will come. I look at OPS not from a financial point of view but as a social security” he underlines.

Till now, two other Congress ruled states which have taken decisions to restore OPS are Rajasthan and Chhattisgarh. Punjab, where AAP had returned to power last year, has also decided to implement the scheme.

The problems in Himachal Pradesh are multiple as the state has a limited resource base but the ratio of employees serving the government is perhaps higher than even many bigger states like Rajasthan and Punjab.There are 1.60 lakh employees and almost 1.30 lakh pensioners in the state.

While presenting the state’s budget for 2022-23 in the earlier assembly, former Chief Minister Jai Ram Thakur gave an interesting break-up of the expenditure of the salaries and pensions of the government employees.

Out of every Rs 100, Rs 26 goes as salaries of the employees , Rs. 15 on pensions, Rs. 10 on interest payments, Rs. 11 on loan repayments, Rs. 9 for Grants for Autonomous Bodies. There is only Rs. 29 left for spending on other activities including development works.

During two years of Covid, when the tourism industry and Excise collections went down drastically, the state had to raise fresh loans to the tune of Rs 26,000 crore during the BJP’s five year regime.

Last week, the new government decided to raise its limit of borrowing from the existing 4 percent of the Gross State Domestic Product (GSDP) to 6 percent.

The government amended Himachal Pradesh Fiscal Responsibility and Budget Management Act, 2005 maintaining that amendment was enacted to provide for the responsibility of the state government to ensure prudence in fiscal management and fiscal stability and maintain pace of development.

“The state government may have to borrow beyond the existing limit set under the Act for which the Act is required to be amended” the amendment in the Act reads.

Former Chief Minister Jai Ram Thakur said the Congress has been targeting the BJP government raising the debt burden. They themselves are going to raise a loan of Rs 3000 crore within this financial year. Its lofty promises like OPS and Rs 1500 pm to women from 18 to 60 years of age, appointments of six Chief Parliamentary secretaries and granting cabinet ranks to three non-MLAs are a recipe for bankruptcy of the state as veteran economist Montek Ahluwalia has said.

Though a powerful lobby of the government employees, which has been agitating on OPS continue to build its pressures but fact remains that not all employees are in its favour. The employees who have been in the service for 20 to 30 years, now have already deposits up to Rs 50 -60 lakhs or even more will not agree for reverting back to OPS.The Centre has, so far, not agreed to the  states’ demand to refund the money deposited under the New Pension Scheme (NPS).

As a way out, Chhattisgarh government has given an option to all government employees to choose between the old pension scheme (OPS) and the new pension scheme (NPS). Chhattisgarh government alone has Rs 17,000 crore plus deposited in the NPS.

The finance department officials in Himachal Pradesh are also seeking details from Chhattisgarh to work-out a new formula for giving options to the employees to remain in the NPS or to join the old pension scheme. The employees will be required to submit an affidavit for the same.

If an employee opts for the old pension scheme, then they have to deposit the government’s contribution and dividend in the NPS account from November 1, 2004 to March 31, 2022 to the state government. At the same time, employee contributions and dividends deposited in NPS during this period will be given to government employees under NPS rules only.