The government on Monday sought approval from Congress to frontload 7,000 crores into the Uniform Pension System (UPS) fund. This is part of a fresh spending proposal of over $51,000 trillion moved as a supplemental request to grants (SDGs) published in Lok Sabha.
“We’re raising it in advance (UPS). This is the responsibility for the government and we’ve put it in advance,” a Treasury official said. BusinessLine. The UPS is being introduced as an option under the National Pension System (NPS) for Central Government Officials. This is intended to provide guaranteed payments upon retirement. It is a “fund-based” payout system that relies on a regular and timely accumulation and investment of applicable contributions (both from employees and the central government) for the grant of monthly payments to retirees. It will be operational from April 1, 2025.
The provision of 7,000 crores will take the government’s responsibility for the first year of the NPS. The government expects that central government officials worth Rs 230,000 will benefit from the UPS. At the time of cabinet approval last year, it was said that the UPS deployment would require an additional 6,250 crores of crores in the first year and arrears of 800 crores from 2025-26.
Supplementary Requests for Grants
Meanwhile, the government has called for a nod to the council to spend an additional £51,462.86 crore for the current fiscal year ending in March, with large chunks of pensions and subsidized fertilizers being released. The government’s total spending sought exceeds Rs 678 lakhrule, of which £6.27 lakhrule coincides with savings and receipts.
Additional expenditures include 14,100 crore to the Fertilizer Bureau, which includes subsidies for urea and P&K Fertilizer. An additional allocation of Rs 13,449 trillion is being provided for government official pensions, including 7,000 crores for UPS.
The total expenditure also includes the Ministry of Telecommunications’ £8,476 crore and a defense pension of 5,322 crore. An additional £2,186 crore of funds was allocated to the agricultural sector, while 3,722 crore was allocated to the Union territory of Jammu and Kashmir to meet to meet additional expenditures to meet the resource gap.
Commenting on ICRA’s Chief Economist Aditi Nayar on the second SDG, he said the latest one is slightly higher than 44,000 crores of net cash in the first batch, but still quite modest in line with our own expectations. “We believe that spending savings by other heads will provide cushioning against the aforementioned net cash in the second batch and prevent a sudden overshoot of GOI total spending in 2025 with revised targets,” she said.
The nominal GDP estimate for FY2025 has been revised 2.1% upwards from the second advance estimate. This will allow headroom to contain a 4.8% fiscal deficit in 201025, even if additional investments pushed fiscal shortfalls beyond the RE RE. Overall, “The fiscal deficit is expected to be printed at 4.7% of GDP in 2025, slightly lower than the fiscal RE,” she said.
