TAG: GS 2: POLITY
THE CONTEXT: The Maharashtra Cabinet recently announced several critical decisions encompassing varied sectors, from pension scheme modifications to infrastructure development and welfare initiatives, reflecting a proactive approach towards governance and employee welfare.
Reinstating Old Pension Scheme (OPS)
- The Cabinet approved a proposal allowing state government employees who joined service post-November 2005 an option to avail the Old Pension Scheme (OPS).
- This decision aims to benefit around 26,000 employees who were selected before November 2005 but received joining letters later.
- It offers them an opportunity to choose between OPS and the New Pension Scheme within a stipulated timeframe.
Infrastructure Development and Toll Charges
- Approval was granted for toll charges of Rs 250 for cars using the Mumbai Trans Harbour Link (MTHL), the nation’s longest sea bridge, which will significantly reduce travel time between Sewri in Mumbai and Nhava Sheva in Raigad district.
Welfare Measures for Employees and Milk Producers
- The cabinet sanctioned a monthly allowance of Rs 5,000 for clerks-typists in Mantralaya, acknowledging their challenges with accommodation and commuting issues.
- Additionally, the government extended a Rs 5 per litre subsidy to milk producers in the state, ensuring a total subsidy payment of approximately Rs 230 crore to support the milk industry.
Wine Industry Stimulus and Economic Incentives
- The state committed to implement a wine industry stimulus scheme for five years, aiming to foster growth in this sector.
- Additionally, industries that have paid value-added tax will receive their rebates in time, encouraging investments in raisin production and grape cultivation, thereby supporting agricultural and industrial development.
Old Pension Scheme (OPS):
- The Old Pension Scheme (OPS) is a retirement scheme approved by the government.
- Government employees receive a monthly pension under the OPS.
- It provides a guaranteed pension for government employees who have completed at least ten years of service based on their last drawn basic salary and the years of service.
- Under the OPS, the government pays the entire pension amount to government employees after retirement.
- Thus, no amount is deducted from employees’ salaries when they are in service.
- After retirement, government employees receive the pension amount and the benefit of the revision of Dearness Allowance (DA) twice a year.
- Since they receive pensions based on their last drawn salary plus DA, their pensions increase when the DA increases twice a year. However, OPS applies only to government employees.
Difference between Old Pension Scheme and National Pension Scheme:
|Old Pension Scheme
|New Pension Scheme
|Only government employees
|Government employees, individual citizens between 18-60 years and NRIs
|Pension payment basis
|Provides pensions to government employees based on their last drawn salary plus DA
|Provides pension based on the investments made in the NPS scheme during their employment
|50% of the last drawn salary plus DA or the average earnings in the last 10 months of service, whichever is more, is given as a pension
|60% lump sum after retirement and 40% invested in annuities for getting a pension
|Employees don’t contribute any amount
|Government employees contribute 10% of their salary (basic + dearness allowance), and the government contributes 14%
|Income tax benefits
|No tax benefits
|Employees can claim tax deductions of up to 1.5 lakh under Section 80C of income tax and up to Rs.50,000 on other investments under 80CCD (1b)
|Tax on pension amount
|The pension amount is tax-free
|60% of the NPS corpus is tax-free, while the remaining 40% is taxable