The new report by the RBI may come as a shock to central and state employees who are requesting old pensions. Indeed, the Reserve Bank of India (RBI) has issued a warning on the reinstatement of the Old Pension Scheme (OPS). According to this analysis, growth will be hampered if OPS is revived because of the higher pension costs. ‘A tremendous step backward’ would be this. Additionally, the research recommended against states using OPS. In addition, it was stated in the name of every program to refrain from providing subsidies and freebies.
Political parties have released several statements.
It was suggested in the advisory released before the elections that states step up their attempts to raise money by implementing policies like registration fees and stamp duties. Political parties announced a lot to entice voters during the recently held assembly elections. Opposition parties led by Congress have called for the National Pension System (NPS) to be abolished in numerous states. Both the government and the employee are required to deposit shares under NPS. The state as a whole will bear the cost if the previous pension is reinstated. This provides a pension guarantee to the employee equal to 50% of their last wage. The report’s estimations indicate that if every state government switches back from NPS to OPS, the total budgetary burden may potentially reach 4.5 times that of NPS. By 2060, the additional burden will amount to 0.9% of GDP annually. Early in 2040, the individuals hired under OPS are anticipated to retire. By 2060, these individuals should start receiving pensions under OPS. The Centre recently constituted a committee in response to actions taken by certain states over the restoration of OPS.
The report will be provided by the committee that the Centre appointed.
The committee has been asked to provide a report on the subject of how NPS may be profitable for the government and the employees in the absence of OPS being restored. The RBI predicts that the gross budget deficit for the current fiscal year will hit a record high. It has been stated that the primary cause of this is the rise in capital expenditures and the fall in revenue. The amount of revenue spent has declined recently. It’s also important to note that the removal of the GST compensating cess has resulted in a drop in revenue. Nonetheless, RBI is anticipated to meet the goal for the full year.
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