Business Standard

BS Number Wise: Old scheme puts burden of employee pension on the states

Some governments are seeking short-term benefits to finance their bills, risking their financial security


Ishaan Gera New Delhi
The Robinson Crusoe economy is a good example to explain the concept of comparative advantage and inter-generational consumption. In a Crusoe economy, where the only occupation is fishing, the current generation controls consumption and conserves for the future. The system works until a generation starts apportioning a larger share of fish.

Some Indian states could be accused of such short-sightedness as they return to an old pension scheme for government employees. The old scheme puts the burden of employee pension on the state; the new system sets contributions from the employer and employee. Returns in the new system are market

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First Published: Oct 04 2022 | 10:26 PM IST

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