Editorial 1 : Reframing Pension
Context: Union cabinet approves Unified Pension Scheme
Introduction: As the clamour against the new pension scheme by a small but vocal section of the electorate gained traction, several state governments such as Rajasthan, Punjab, Himachal Pradesh and Chhattisgarh had announced a shift back to the old pension scheme.
Centre’s response: Unified Pension Scheme
- Union cabinet approved a new Unified Pension Scheme (UPS) for central government employees.
- The scheme has incorporated elements from both the old and the new pension scheme
- It has partially rolled back some of the more fiscally appealing, hard-won features of the National Pension System.
Features of Unified Pension Scheme (UPS)
- Under UPS, government employees will receive a “defined benefit” — a pension equivalent to 50% of their average basic pay drawn in the year prior to retirement.
- To finance this, there will also be a “defined contribution” — the government will now contribute 18.5% of the basic salary of employees, up from 14%, while employees will continue to contribute 10%.
- It is unlike the unfunded OPS, and also benefit from greater clarity, assuring a “defined benefit”, a key feature of the old pension scheme (OPS).
Fiscal burden on government
- Unified pension scheme raises the possibility of the fiscal burden on the government increasing as it will have to make up for any shortfalls.
- the new scheme will entail an additional outgo of Rs 6,250 crore in the first year, and Rs 800 crore as arrears for the employees who have retired since the introduction of NPS.
- The total outgo will increase further if state government employees are included in UPS.
- The share of expenditure allocated towards pensions is already a sizeable portion of the budgets of Union and state governments.
- For all states and Union Territories, allocations to pension were estimated at 12% of their revenue expenditure in 2023-24. It is much higher in states like UP, HP and Kerala.
Conclusion: A return to defined benefits, which provides generous benefits to only a tiny section of the labour force, runs the risk of not just increasing the burden on the exchequer, but also further constraining the space for spending on other avenues.
Editorial 2 : Momentous in Kyiv
Context: Prime Minister’s visit to Ukraine
Introduction: PM Modi’s visit to Ukraine marks the beginning of a long overdue rebalancing in India’s relations with Russia and Ukraine.
Overcoming the Russian Veto
- India is no longer self-deterred by a presumed “Russian veto” in expanding engagement with Ukraine.
- The political deference to Russian sensitivities played a role in limiting India’s engagement with former members of the Warsaw Pact.
- No Indian PM has travelled to the Czech Republic, Bulgaria, Hungary, Poland, Romania, and Slovakia since the dissolution of the Warsaw Pact in 1991, this underlines the long and regrettable political neglect regarding these countries.
Reasons for Delhi’s neglect towards Warsaw Pact countries after 1991
- Political emphasis on sustaining the Moscow links.
- Preventing Russia from engaging with Pakistan at the highest level.
Outcome of the PM’s Kyiv visit
- Beginning of a long-overdue correction to India’s approach to the Russian invasion of Ukraine in February 2022.
- The political costs of the reflexive silence on Russian aggressions had been mounting
- There was no better way than PM travelling to Kyiv, expressing empathy for victims of the war, listening to President Zelenskyy’s concerns, underlining Delhi’s strong commitment to the principle of territorial sovereignty and rebooting the bilateral relationship to elevate it eventually to a “strategic partnership”.
Balancing the relations
- Delhi’s rebalancing does not mean a downsizing of India’s relationship with Moscow. But now to pursue its interests with both sides, Delhi will no longer need to look over its shoulder.
- Rebalancing Delhi’s ties with Moscow and Kyiv and de-hyphenating India’s engagement with Russia and Central Europe involves:
- cultivating greater sensitivity to the complex history of geopolitical contestation;
- economic interdependence;
- competing national narratives.
Conclusion: India’s rebalancing sends a clear signal that Delhi will no longer let the ideological inhibitions inherited from the 20th century guide its European policy in the 21st.