Are We Burdening Future Generations, Asks Nirmala Sitharaman on Old Pension Scheme Demand | Exclusive

Amid opposition demands to bring back the old pension scheme in states, especially during election season, Finance Minister Nirmala Sitharaman has questioned whether current generation are benefitting at the cost of the financial stability of future generations.

In an exclusive interview to Network18 Group Editor-in-Chief Rahul Joshi, Sitharaman said it was the Congress that brought in the new pension scheme.

? Introduction of the new pension scheme was during the Congress?s time. Are we paying current generation with burden on future generation? What is reasonable balance? What are we are leaving for the future generations? We have to look at the fiscal situation of the state for the next decade.?

Several state governments like Rajasthan, Chhattisgarh and Punjab have indicated that they will shift to the old pension scheme while Himachal Pradesh too has indicated the same intention.

Minister of State for Finance Bhagwat Karad had informed Parliament on December 12 that there was no proposal under consideration of the central government for restoration of the old pension scheme.

The old pension scheme, under which the entire pension amount was given by the government, was discontinued in the country from April 1, 2004. According to the new scheme, employees contribute 10 per cent of their basic salary towards pension while the state government contributes 14 per cent.

Former RBI governor Raghuram Rajan recently cautioned that states reverting to the old scheme would end up curbing current expenditure but may build liabilities for the future.

In an interview to an online portal on the sidelines of the World Economic Forum (WEF) at Davos last month, Rajan had said that the new pension scheme was adopted because huge liabilities had built up in the old scheme.

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