One Rank One Pension (OROP) will have a significant impact on the country's fiscal bill and the overall cost will be around Rs 16,000 crore in the current financial year, says an HSBC report. The government has "in principle" accepted OROP - a demand by India's defence personnel that uniform pension should be paid to armed force retirees with the same rank and same length of service.
This would mean higher current pension payments as well as paying off arrears (retrospectively from July 2014), it will have a significant impact on the fiscal bill. We estimate the overall cost to be Rs 16,000 crore (USD 2.5 billion or 0.1 per cent of GDP) in FY16," HSBC said in a research note. As per the global brokerage firm, the existing defence pension bill is likely to go up by Rs 10,000 crore, while arrears totalling Rs 12,000 crore will be paid over two years.
