SOME IMPORTANT RELIEFS IN BUDGET 14-15 FOR EX-SERVICEMEN

ONE RANK ONE PENSION

56.       Hon’ble Members are aware of the long standing demand of the Defence Services for One Rank One Pension (OROP).  It is an emotive issue, it has legal implications, and it has to be handled with great sensitivity.   During the tenure of the UPA Governments, changes in the pension rules applicable to the defence services were notified on three occasions in 2006, 2010 and 2013.  As a result, the gap between pre-2006 retirees and post-2006 retirees has been closed in four ranks (subject to some anomalies that are being addressed): Havildar, Naib Subedar, Subedar and Subedar Major.  There is still a small gap in the ranks of Sepoy and Naik and a gap in the ranks of Major and above.  We need a young fighting force, we need young jawans, and we need young officers.  We also need to take care of those who served in the defence forces only for a limited number of years.  Government has therefore decided to walk the last mile and close the gap for all retirees in all ranks.  I am happy to announce that Government has accepted the principle of One Rank One Pension for the defence forces.  This decision will be implemented prospectively from the financial year 2014-15.  The requirement for 2014-15 is estimated at `500 crore and, as an earnest of the UPA Government’s commitment, I propose to transfer a sum of `500 crore to the Defence Pension Account in the current financial year itself.

EDUCATION LOANS

64.       Hon’ble Members will recall that my predecessor, Shri Pranab Mukherjee, had, in the Budget of 2009-10, introduced the Central Scheme for Interest Subsidy (CSIS) in respect of education loans disbursed after 1.4.2009 under which Government took over the burden of interest for the duration of the period of study and a little beyond.  The scheme brought great cheer to student-borrowers and their families.  However, I have noticed a sense of discrimination among students who had borrowed before 31.3.2009, struggled to pay interest during the period of study, and continued to service the loans afterwards.  I think they deserve some relief.  I therefore propose a moratorium period for all education loans taken up to 31.3.2009 and outstanding on 31.12.2013.  Government will take over the liability for outstanding interest as on 31.12.2013, but the borrower would have to pay interest for the period after 1.1.2014.  It is estimated that nearly 9 lakh student borrowers will benefit to the tune of approximately `2,600 crore.  I intend to provide the funds in the current financial year itself.  Accordingly, a sum of`2,600 crore will be transferred to the Canara Bank, the designated CSIS banker.  Details of the scheme will be announced shortly.