Govt projects 20% rise in defence pension budget next year on OROP

The defence pension budget was likely to be around Rs 65,000 crore for 2016-17, up 20 per cent from the 2015-16 budgeted estimates of Rs 54,000 crore, the defence ministry said on Wednesday.

The ministry issued detailed instructions with regards to the proposed one rank, one pension (OROP) scheme for over 1.8 million ex-servicemen and war widows. It said the annual recurring financial implication on account of OROP implementation would be around Rs 7,500 crore at current rates. The statement said arrears from July 1, 2014, to December 31, 2015, would be about Rs 10,900 crore. The payment of arrears, however, would be staggered. "Payment of arrears and revision of pension under OROP is to be made by the Pension Disbursing Authorities in four instalments, except for family pensioners and pensioners in receipt of gallantry awards who will be paid arrears in one instalment," the ministry said.

It said 86 per cent of the total expenditure on OROP would benefit junior commissioned officers and other ranks, while the rest would benefit officers.

Finance Minister Arun Jaitley faces an uphill task in balancing his books for the coming 2016-17 Budget. He faces an additional Rs 11,000-crore burden from OROP, plus a Rs 74,000-crore burden on account of the recommendations of the Seventh Pay Commission.

Jaitley had committed to a healthy pace in public investment in infrastructure, at a time when the private sector was dealing with stretched balance sheets.