Putting an end to months of speculation, the government on Saturday announced it will be implementing 'One Rank One Pension' (OROP) for the armed forces. The veterans initially said they were not satisfied with the scheme, but later, after a meeting with Defence Minister Manohar Parrikar, accepted the government version.
The defence minister, making the much awaited announcement at a press conference called at short notice, said: "Despite the huge fiscal burden, given its commitment to the welfare of ex-servicemen, the Government has taken a decision to implement the OROP."
Parrikar said an order implementing the scheme was likely to come in a fortnight to a month.
The minister squarely blamed the previous Congress-led government for miscalculations on OROP, and said it led to the delay in its implementation.
He also quoted a reply by a former minister of state for defence in parliament in 2009, who had said "there are administrative, technical and financial difficulties in implementing OROP".
"It is for these reasons that the present government took some time to fulfill its promise," he said.
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Parrikar also urged the veterans to give up the agitation and resume the role they have been playing in nation-building.
"Prime Minister Modi has fulfilled his commitment... I would like to mention that the contribution of military veterans in nation-building in the past 67 years has been immeasurable. Now that OROP is hopefully behind us, I urge the veterans to contribute to the vital task of nation-building and development," the minister said.
While initially the veterans said the announcement made by the government did not satisfy them, later, after a meeting with Parrikar, the issues were sorted out.
Maj. Gen. Satbir Singh (retd) told reporters after the meeting that they discussed the issue of OROP being denied to those who take premature retirement.
"Premature retirement was the one point we wanted to discuss. The defence minister verbally confirmed there is no VRS in armed forces, there is just premature retirement," said the retired major general.
"He will talk with the prime minister and let us know in a few days. Till that time, we will also talk with the core group and decide tomorrow (Sunday) whether to take the agitation forward," he said.
Asked if they were satisfied, Maj. Gen. Singh said: "After this statement, yes, we are satisfied."
Earlier on Saturday, the veterans said they were not "fully satisfied" with what was being given, exclusion of those who take voluntary retirement being a major issue.
Parrikar in his press conference said "personnel who voluntarily retire will not be covered under the OROP scheme", even as he later told reporters that those who retire with injuries will be "protected".
The estimated cost to the exchequer for the scheme will be Rs.8,000-10,000 crore, and the arrears will amount to around Rs.12,000 crore.
The scheme announced by the government will take 2013 as the base year to calculate pensions.
"Pensions will be re-fixed for all pensioners retiring in the same rank and with same length of service as the average of minimum and maximum pension in 2013," Parrikar said.
Those drawing pension above the average will be protected.
Parrikar said the government came to power on May 26, 2014 and the budget came in June, so the date of implementation will be immediately after that, which was July 1, 2014.
The period for review is five years, something that has been a major sticking point.
The arrears are to be paid in four instalments, at a gap of every six months.
To war widows, the arrears will be given in one instalment.
Minister of State for Defence Rao Inderjit Singh said veterans above 60 years of age will also get arrears in one go.
Announcing the scheme, Parrikar said the government was dedicated to the scheme which has been pending for "40 years".
"The issue of OROP has been pending for nearly four decades. It is a matter of deep anguish that various governments remained ambivalent on the issue of OROP," said Parrikar.
In the government press conference, Parrikar blamed the previous Congress-led government, saying they promised implementation of OROP in 2014-15, but "did not specify what OROP would be, how it will be implemented or how much it will cost".
"An estimated Rs.500 crore provided for OROP in the budget presented in February 2014 by the then government was not based on any calculation," he said.
"The reality, however, is that to implement OROP the estimated cost to the exchequer would be Rs.8,000 to Rs.10,000 crore at present, and will increase further in future," he said.
Currently the pension bill of the defence ministry stands at Rs. 54,000 crore.