Thursday, May 30, 2013
Increase retirement age of government employees to 62
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On 21st March 2013, there was an unstarred question in Rajya Sabha,
about whether there was a proposal to increase the retirement age of
Central government employees.[click here to see]
The relevant MOS answered there was no such proposal. That’s not quite
true, because there is such a proposal floating around and it went to Cabinet
sub-committee and an in principle decision to implement was taken by
Department of Personnel and Training (DOPT). One should not mix up
existence of a proposal with a decision about implementing it.
Evidently, a decision has now been taken to increase the age from 60 to
62 years, the last time such an increase took place was in 1998, when
there was an increase from 58 to 60 years. Whenever such a decision is
taken, debates centre on the big picture. What are arguments for? First,
life expectancies are increasing. There is a shortage of good people
within government. Let’s tap this expertise. Second, in any case there
are extensions in “exceptional circumstances”. But that’s arbitrary and
can be shot down by the Appointments Committee of Cabinet (ACC). Why not
formalize the system by allowing extensions to everyone? The trouble
with this argument is that there will be no finality about 62 either and
there will be “exceptional circumstances” beyond 62.
Third, there should be parity. Professors
now retire at 65. High Court judges retire at 62, Supreme Court judges
retire at 65. The counter-arguments of the big picture are also obvious.
India is a young country, young need employment opportunities.
Promotional avenues of existing civil servants get blocked. Often, in
the private sector, people retire at 60 and there are extensions, with
the qualification that extensions are at consolidated monthly
emoluments, with no perks. An increase in retirement age occurs with all
perks. Therefore, there are significant fiscal costs. While these big
picture arguments and counter-arguments are important, my problem is
that such decisions aren’t taken because of logical coherence. They are
ad hoc decisions, driven by myopic motives. First, increase in
retirement age postpones the one-time superannuation burden of severance
payments by around Rs 5000 crores. For a government that has drawn up
red lines on deficit numbers, that’s a desirable objective, even though
it is myopic because it increases fiscal costs on future governments.
Second, there’s a clear political cum electoral motive. Outright, if we
include Defence, we are talking about 1.5 million Central government employees.
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