RBI Warns About Old Pension Scheme Linked to Inflation Allowance
The Reserve Bank of India (RBI) has issued a warning about the old pension scheme linked to inflation allowance. It suggests that this could increase pressure on the state’s finances, possibly disrupting their ability to fund certain priority developmental expenditures. The RBI report also indicates that provisions on goods and services that harm society and consumers, subsidies, and guarantees could pose difficulties in their financial situation.
Old Pension Scheme Implemented in Several States
Several states, such as Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh, have implemented the old pension scheme. These state governments have informed the central government and Pension Fund Regulatory and Development Authority about their decision to implement the old pension scheme for their employees. The Finance Ministry has informed the Parliament that these states have requested the return of their employees’ contribution amount in the new pension scheme.
Impact on State Finances
According to the report, this change could potentially worsen the financial situation of the states. The initiation of the old pension scheme in some states and others moving in this direction could exert significant pressure on state finances. The report suggests that if all state governments adopt the old pension scheme, it could increase the accumulated fiscal burden.
Need for Revision Considering State Finances
The report states that this change will increase the pension burden for retirees under the old pension system. This material is likely to run out after the 2040s, potentially putting more pressure on state finances until 2060. This could be against the interests of future generations, diminishing the benefits of past reforms. Considering the financial situation of the states, there might be a need for revision. It will be necessary to ensure that the financial resources of the states are used for holistic development to better serve the interests of society.
★The RBI has issued a warning about the old pension scheme linked to inflation allowance.
★Several states, including Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh, have implemented the old pension scheme.
★The change could potentially worsen the financial situation of the states.
★There might be a need for revision considering the financial situation of the states.
