Pension estimates may be 20-30% off mark

Rs 60,000 cr outgo does not include quasi-government staff.

The fact that pension payouts by the central and state governments have grown by around 18 per cent annually between 1990-91 and 2004-05 (from Rs 6,900 crore to around Rs 60,000 crore) has sent alarm bells ringing, but this, too, could turn out to be a gross under-estimate since it does not include quasi-government employees (and therefore pensioners) such as those employed in government-funded universities like Jawaharlal Nehru University or Delhi University.

Apart from the fact that the current government pension payout is grossly underestimated, this also means that all future projections could go completely wrong since the base level of employees used for projections may itself be incorrect.

An all-India survey done for the Ministry of Finance by AC Nielsen ORG MARG, shows the number of those who are working for the government (central and state) is significantly different from that shown in the official records.

This is particularly important since the Working Group on Assessment of Pensionary Liability of the Government of India estimated, in 2001, that the central pension liability would rise to Rs 29,891 crore in 2009-10, a figure that may not be that alarming given the likely increase in GDP levels during the interim period.

The problem, however, is that the government itself does not have a correct idea of the number of pensioners it has. How imprecise government estimates are is best seen from the fact that, as the working group report brings out, in no single year has the pension estimate been correct.

In 1999-00, for instance, the Budget estimate (BE) for defence pension was Rs 7,349 crore compared with the actual payout of Rs 11,024 crore, the civil services employee pension BE was Rs 2,800 crore versus actuals of Rs 3,286 crore, Rs 3,300 crore versus Rs 4,018 crore for railway pensioners and Rs 514 crore versus Rs 681 crore for postal pensioners.

While official pension calculations estimate the central government has around 4.5 million employees (civil services, post, telecom, defence and railways) and 3.8 million pensioners, this does not include quasi-government employees, or those who one way or another get a pension payment from the Consolidated Fund of India pension payments to those retired from Delhi University, for instance, do not get added in the overall pension payments but get paid in the form of a grant/expenses for Delhi University each year.

The human resources department, for instance, is shown to have just 2,411 employees in this year’s Budget papers clearly all the hundreds of thousands of teachers in various schools and colleges do not get accounted for directly as government employees even though their pensions are paid from the Consolidated Fund of India through various Budget allocations.

According to an all-India survey done for the ministry of finance by AC Nielsen ORG MARG, the total number of people employed by the central government works out to around 7 million.

This, by the way, is not based on the number of respondents who said they were employed by the central government (a contract sweeper could, for instance, feel this way) but on the number of people who said they would get a government pension after retirement.

And while the official number of state government employees is put at around 7.5 million, the survey shows this to be around 13 million.

Though this looks like a vast exaggeration at first sight, the ministry of labour’s Employment Review of 1998 (published in 2002) puts the number of people employed in quasi-government (central) jobs as 3.5 million and quasi-government (state) jobs at 3 million, and local bodies at 2.3 million that is, the labour ministry numbers validate the survey in a broad sense.

In which case, the Nielsen ORG MARG survey is cause enough for the government to do a serious enumeration of the number of employees and pensioners it has.