December 06, 2020

Pension Proposal & Defence Privatisation

B Arjun

THE Modi government is perilously audacious. In the midst of a clear and present military crisis in Ladakh, the department of military affairs (DMA), headed by chief of defence staff, General Bipin Rawat has floated a proposal in end October to slash officer’s pensions and enhance their retirement age.

According to current terms and conditions, an officer is entitled to a full pension after completing twenty years of service, the DMA proposal intends to reduce that to 50 per cent; 26-30 years of service will earn only 60 per cent of the pension, and 31-35 years of service only 75 per cent of the pension. Full pension will be applicable only to an officer who completes more than 35 years of service.

The proposal makes premature retirement (PMR) a difficult proposition for those seeking to leave army service after rendering twenty years of service. The armed forces officers will be left with no option but to serve till retirement.

The proposed enhancement in the retirement age of colonels from 54 to 57 years and brigadiers from 56 to 59 years is likely to make the army look old and defeat the very idea of maintaining a young fighting force.  This will also deny the many sectors of the economy, like aviation facility and retail management, skilled manpower.

This proposal, if approved by the cabinet, will be as explosive as the new farm laws introduced by the government. It has already caused a social media storm. The armed forces veterans are feeling pained and betrayed. It is also reported that the three service headquarters have expressed apprehensions about the proposal. According to India Today, the naval headquarters (NHQ) considers the proposal unimplementable, laced with a potential to trigger dangerous and avoidable precedent. The mathematically flawed proposal, according to the NHQ, could lead to a trust deficit within the armed forces, hampering the evolution of joint theatre commands.

The entire ire against the proposal is being directed against the chief of defence staff. He has been taking all the brickbats and protecting his leader. The government is using Gen Rawat’s shoulder to fire the gun. Modi is using Gen Rawat to prevent himself from being attacked for an unpopular and devious policy proposal. 

Why should Modi, who doesn’t miss an opportunity to use soldiers for his own image, indulge in such reckless policy-making and disrupt one of the most stable State institutions?    

Those defending this rather pathetic policy say that such a measure is necessitated by the continuous rise in the defence pensions. The skyrocketing pension-bill adversely impacts the budgetary allocations for purchase of military hardware. It is being argued “the pension bill has more than doubled from Rs 55,000 crore in 2015 to Rs 1.33 lakh crore in 2020-21. India has 3.2 million pensioners and dependents and only 1.6 million ex-servicemen. Pension outlays, as the last defence budget showed, are now increasing faster than the component for buying new military hardware like warships, planes and tanks.” This argument ignores the fundamentals of social security net of which pensions form an important element.

Military modernisation does demand additional funds, especially when India is one of the biggest arms importers in the world.  The upgraded and automated military machines do entail downsizing the manpower but why should it lead to altering the pension rules?

It is important to understand the pressures on the government that is leading it to commit such harakiri. Apparently, the skyrocketing fiscal deficit coupled with recessionary trends in the economy is one of the main reasons for the pension-related tensions within the government. The question which many are asking is why should the armed forces be the first ones to tighten their belts. If the fiscal situation is so poor then why don’t we see the government reducing its propaganda budget? Why is the prime minister (PM) buying expensive jets for personal use? Why is the PM hell-bent on wasting tax-payers money on re-doing the best area in New Delhi? And why are lakhs of crores of corporate loans being waived off?

The fact is that the BJP government’s poor economic management skills coupled with its ideological predilection for the privatisation of State assets are casting a shadow over the hard-earned pensions of the officer corps. It is alleged that a few crony capitalists close to the government are coaxing it to privatise many of the defence roles and functions, like defence lands, revenue budget, and the defence canteens.

The CDS also intends to reduce the number of canteen stores department (CSD) outlets and curtail the sale of many foreign items. The CSD is the most profitable retail chain in India. Its annual profits exceed more than Rs 200 crores, much ahead of Reliance Stores and Big bazaar. With Reliance now entering the retail business in a big way laced with foreign money, it is not difficult to understand why the CSD is being targeted.  

Ideologically Modi government is committed to privatisation. It is pursuing neoliberal policies under the garb of nationalism. It is ushering in an era of oligarchy where even the defence functions will also be corporatised. It draws its inspiration from the Anglo-Saxon world that is now in the vanguard of outsourcing defence functions to private military corporations (PMCs). All that the government is doing is splinter the national military – between combatants and non-combatants. As Gen Rawat says, “We are more concerned about the wellbeing of the frontline combatant soldiers who face the real hardships and on whose courage and valour we all seem to be basking in.”

The general considers the non-combatants to be redundant. This is largely because he is working on military transformation plans that include bringing in corporate entities to provide supply services and machine maintenance functions.

Big pension-bills and the arguments about fiscal prudence are a smokescreen to hide the actual intentions to privatise the military. Privatisation would also pave the way for the entry of foreign, mainly Anglo-American military service providers to enjoy a share of the defence revenue budget.

The government is also keen because of the pressure imposed by a military alliance with the Americans. Even after the signing of the four foundational agreements, America remains dissatisfied with the level of India’s participation and performance in partnership. It expects India to do more, enhance its military budget and buy more American war machines.   

Engagement with America is never simple for any country. Prior to starting the alliance, America always hands over a long to-do list to its allies and partners. The prescription slip often gives the course that the partners must chart to be eligible to plug and play in the designed order.