Press Releases Archive

"OPS is an unmitigated fiscal disaster" - FDR launches campaign to protect the future

Hyderabad - 16th November 2023: The Foundation for Democratic Reforms (FDR) - India's leading think-tank and research hub for vital governance reforms, orchestrated its campaign titled 'The Inevitable' at Ramanaidu Studios, Film Nagar, on Thursday. This initiative aims to raise awareness and sensitize the public about the repercussions of the Old Pension Scheme. Dr. Jayaprakash Narayan, former civil servant and MLA, currently serving as the General Secretary of FDR, led the session. The event was graced by esteemed dignitaries – Shri Anjaneya Reddy, Former DGP, Shri Vijayendra Prasad, Member of Rajya Sabha, and Shri Tammareddy Bharadwaja, noted Film Director.

During the launch, three short films were screened, depicting the inherent dangers of the Old Pension Scheme (OPS) to the nation's financial stability. These films emphasized the strain on the current and future taxpayers and the looming fiscal disaster affecting lives of future generations. Delving deeply into the subject, the campaign seeks to raise awareness about the detrimental impact of OPS on citizens, urging them to grasp the implications before the voting season. The primary goal of the campaign is to secure widespread support against OPS by encouraging people to vote on During the session, Dr. Jayaprakash Narayan shed light on the current fiscal position of governments, the impact of OPS and the need to encourage citizens to cast their votes to oppose OPS.

Highlighting the need for awareness, Dr. Jayaprakash Narayana, General Secretary of Foundation for Democratic Reforms said, “We aspire for individuals to make informed decisions before casting their votes, especially in the context of issues like the Old Pension Scheme. It is crucial to align ourselves with practical solutions that prevent huge and unsustainable burden on taxpayers. This can be achieved by mandating contributions from both employees and employers during their active service.”

FDR expresses concern about the unfunded Old Pension Scheme, noting its challenges amid growing pension liabilities and looming threat to financial stability and credit of India. The OPS disproportionately takes away 18% of current tax revenue, unfairly favoring only 3.2% of the workforce while impacting the remaining 97%. Moreover, OPS benefits are not only adjusted for inflation but are also linked to periodic salary hikes for government employees. In essence, past services are rewarded based on today's salaries. This leads to an unsettling situation where pensions in many cases become several times the last drawn salary due to continual salary hikes. The impact of OPS on future generations and government resources is grave. As people live longer and the number of retired people in the total population increases, most of our tax money will inevitably be directed towards retirement benefits. This trajectory is simply unsustainable and burdensome for the country’s already stretched fiscal situation. OPS will lead to unmitigated fiscal disaster.

Transitioning back to OPS will plunge the country into a deep debt crisis. The financial strain would impede essential services like rule of law, healthcare, education, and infrastructure development. Current fiscal realities at both State and Union levels show that governments already are grappling with a huge burden of salaries, pensions, and interest payments, surpassing the revenue. Debt-to-GDP ratio at the State and Union levels stands at 28.7% and 57% respectively, breaching the limits set by the Fiscal Responsibility and Budget Management (FRBM) law.

Alarming projections in the State of Andhra Pradesh highlight an ominous picture: if the State reverts to OPS, the burden of salaries, interest payments and pensions will be about 220% of the State’s own revenues in 2041, and 294% in 2050. With OPS, the debt-to-GDP ratio will surge to 77% in 2040, and 107% in 2050. There will be no money in coffers, and creditors will not lend money. As a result, there will be no money to pay even salaries and pensions. Government will go bankrupt. All citizens and employees will suffer serious hardship. Addressing this impending crisis requires urgent and viable solutions before it spirals out of control.

About FDR

The Foundation for Democratic Reforms (FDR) is one of India's foremost think tanks and advocacy groups. Under the guidance of Dr. Jayaprakash Narayan, a distinguished former civil servant and MLA, FDR has contributed to shaping pivotal reforms across politics, governance, and public policy. Dedicated to making Indian democracy deliver better, FDR undertakes extensive research as well as several advocacy initiatives. FDR’s reform proposals are based on evidence, logic and global best practices, but suited to Indian conditions. Based on the prevailing circumstances, FDR pushes for reforms at the opportune time.

It was established in 1996 and is based in Hyderabad, Telangana.

Friday, November 17, 2023 - 16:16

Launch of FDR’s Publication - 'Towards Viable Universal Healthcare'

The Covid-19 pandemic has rightly turned public attention to healthcare delivery in the country. However, it must be recognised that our healthcare crisis is not one of recent origin. The policy failings predate the pandemic and the prolonged neglect of the healthcare system has worsened healthcare challenges over time. Public expenditure on healthcare has remained low at around 1.2% of the GDP. Similarly, patronage for public health facilities has been sub-par at 25% of all doctor consultations which means that majority of healthcare services are being availed in private facilities at much higher costs. There is no coordination across the three levels of care - primary, secondary, and tertiary - resulting in the overburdening of the secondary and tertiary care hospitals. Further, India’s population is undergoing an epidemiological shift with a rise in non-communicable diseases like diabetes, high blood pressure, heart disease, lung disease etc. This on the one hand adds to the burden of an already strained system and on the other hand, further increases healthcare expenditure. Consequently, about six crore Indians descend into poverty every year due to lack of access to quality and affordable healthcare services. In the two Telugu states alone about 50 lakh people are descending into poverty every year on account of ill health.

There is an urgent need to design a coordinated and comprehensive healthcare system taking into consideration current and future requirements. Fortunately, India can claim several strengths in the healthcare sector. We train a large number of healthcare professionals and are self-sufficient in human resources. After China, India has the highest annual inflow of qualified doctors. In addition, the cost of most healthcare interventions, including the most complex medical and surgical interventions, is among the lowest in the world. Similarly, the Indian pharmaceutical industry is highly efficient and economical, ensuring adequate drug supply at a low cost. Therefore, an effective healthcare system that provides quality healthcare at a low cost can be built by leveraging these strengths.

The proposed model in the publication titled ‘Towards Viable Universal Healthcare’ is a modest attempt to ensure effective, accessible, and affordable healthcare services for all. The model seeks to build on existing infrastructure, institutions and programmes with least dislocation. It leverages our considerable strengths in the health sector, and builds on successful best practices. Being flexible and pragmatic, it can be seamlessly adapted to suit varying conditions across states. It is an eminently sustainable framework that seeks to ultimately reduce the disease burden in a cost-effective manner for the state as well as the people.

The key elements of this model are: continuum of care through a publicly-funded Family Physician-led primary care system with choice and competition for all outpatient care; limiting secondary and tertiary level hospital services to inpatient care, upon referral; expanding the scope of Ayushman Bharat (and other public-funded single-payer health insurance/assurance schemes) to cover all secondary care procedures for all citizens, whilst removing tertiary care services from its coverage; and making district and public teaching hospitals the mainstay for quality, cost-effective tertiary care in the country. While the public exchequer will largely bear the cost of operationalising this model, private players will play a key role in delivering services, ensuring efficiency as well as cost-effectiveness. It envisages public-private-partnerships and innovative modes of financing. 

The additional cost of implementation of this model will be about Rs. 85,000 crores per year across the country - about 0.4% of the GDP. Even with this additional expenditure, the total government expenditure of the country will be only 1.6%, the lowest among all major countries. In Telangana and Andhra Pradesh, the additional cost will be about Rs. 1900 crores and Rs. 2600 crores respectively. 

The proposed model, if implemented, will build a robust, viable, affordable, universal healthcare system in India. A holistic restructuring of the healthcare system is critical in transforming the health sector and improving the lives of hundreds of millions of our people. In an effort to advocate for these reforms, the Foundation for Democratic Reforms (FDR) is reaching out to all stakeholders - the Prime Minister, Union Ministers, Niti Aayog, Economic Advisory Council, Members of Parliament, the media and several of the organisations and individuals working in this field. With healthcare being a state subject, reform ultimately would have to begin from the states. Therefore, FDR has sent the publication to the Chief Ministers, Health Ministers, and the bureaucrats concerned of all the states in the country. Additionally, FDR intends to personally call upon various states to persuade the governments to implement these reforms, beginning with Telangana, Andhra Pradesh, Tamil Nadu, Karnataka, Kerala, Maharashtra and Odisha. 


Tuesday, November 9, 2021 - 20:47