Amid OPS row, Finance Secretary-led committee to examine pension issues of government staff

Finance Minister Nirmala Sitharaman

A committee headed by Finance Secretary TV Somanathan has been tasked to review the issues plaguing government employees' pensions, Finance Minister Nirmala Sitharaman said on March 24.

"Representation has been received that the National Pension System for government employees needs to be improved," the finance minister said in Lok Sabha.

"I propose to set up a committee under the Finance Secretary to look into this issue of pensions and evolve an approach which addresses the needs of the employees while maintaining fiscal prudence to protect the common citizens," she added.

"The approach will be designed for adoption by both central and state governments."

The setting up of the committee to look into the matter comes at a time when several states have made a move back to the Old Pension Scheme.

On March 14, the finance ministry informed the Parliament that Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh had informed the Centre about their decision to restart the Old Pension Scheme for their state government employees and had requested the refund of corpus accumulated under the NPS.

The Old Pension Scheme is widely seen as being fiscally more expensive. However, it has taken a central role in state politics, with the refusal of the erstwhile BJP government in Himachal Pradesh to bring back the Old Pension Scheme seen as one of the reasons behind its loss in the recent state elections held in late 2022.

More recently, Bharatiya Janata Party-ruled Maharashtra saw demands for a return to the Old Pensions Scheme, with state government employees going on a strike starting March 14. The strike only ended on March 20 after Chief Minister Eknath Shinde assured them that the benefits of the Old Pension Scheme would be included in the new scheme.

On March 20, Minister of State for Finance Bhagwa Karad had told the Lok Sabha that there is "no proposal under consideration of Government of India for restoration of old pension scheme in respect of Central Government employees".

Credit cards and LRS

In addition to setting up the aforementioned committee, Sitharaman also said on March 24 that the Reserve Bank of India had been asked to bring credit card payments for foreign tours under the purview of the Liberalised Remittance Scheme as such payments escape tax collection at source.

"It has been represented that payments for foreign tours through credit cards are not being captured under the Liberalised Remittance Scheme," Sitharaman said.

"The Reserve Bank is being requested to look into this with a view to bring credit card payments for foreign tours within the ambit of LRS and tax collection at source thereon," she added.

The latest move comes after the Union Budget for 2023-24 had proposed a hike in the tax collection at source for overseas packages to 20 percent from 5 percent.