Comptroller and Auditor General of India Girish Chandra Murmu on Thursday said that the relaunching of the old pension scheme in some states was financially risky for the governments, The Indian Express reported.
“The RBI and the 15th Finance Commission have also taken note of the potential sources of fiscal risks for Indian states, including declining own tax revenue, relaunching of old pension schemes in some states, rising dues of loss-making power distribution companies and the periodic disbursal of farm-loan waivers and subsidies,” Murmu said at the 30th Biennial Conference of Accountants General.
The official also said that the fiscal health of states was a subject that required careful assessment. He expressed concern about the “low mobilisation” of state governments’ sources of tax and non-tax revenue.
In May, two Congress-ruled states – Rajasthan and Chhattisgarh – decided to implement the old pension scheme, and the party also promises to restore it in Gujarat and Himachal Pradesh if elected to power. In Punjab, the Aam Aadmi Party government has also said that it will restore the old pension scheme.
In the old pension scheme, employees get 50% of their last drawn basic pay plus dearness allowance on retirement, according to Mint. Under this system, employees do not have to contribute to their pensions.
Under the new pension scheme, individual savings are pooled into funds during the period of employment. Individuals can choose from a range of schemes promoted either by public sector banks or private companies.
The new pension scheme came into effect on April 1, 2003.