“We don’t look at colleges, degrees or grades. “We hire young professionals whom others disregard,” Vembu says. The whole piece is worth a detailed read, but two points stand out.
The firm today, is a ‘100%, bootstrapped, $40-millio-a-year revenue business that sends $ 1 million to the bank every month in profits’. In an interesting article on Forbes titled ‘The Smartest Unknown Indian Entrepreneur’, Sramana Mitra profiles Sridhar Vembu, the founder and CEO of an Indian firm called AdventNet. These are desirable not only on the grounds of fiscal prudence and equity, but also to keep the military lean and young.įiled under: Business - Arjun Swarup 5:16 pm This can be achieved by reducing the minimum military service requirements, pushing for early retirements with lateral absorption schemes and identifying a new model for defence pension reforms. There is an immediate need to reduce the defence pension bill, which will otherwise continue to be a big drain on the national exchequer. The government has decided against introducing pension reforms in the defence services. This is borne out by the recent trends and is indicated by realistic assessment of such liabilities in the future years. It is believed that the defence pension bill has the potential to reach an unsustainable level, and perhaps even exceed the wage bill.
The implementation of Fifth Pay Commission recommendations had led to an increase in the defence pensions bill from 4947 Crore in 1997-98 to 10770 Crore in 2000-01. The recommendations of the Sixth Pay Commission are likely to push the defence pensions bill further northwards, if the example of Fifth Pay Commission is anything to go by.
The improved health care and increased life expectancy will skew the pensioners to employees ratio even further. Moreover, Indian population above 60 years of age is growing at a rapid pace, at an annual growth rate of 3.8 percent per annum in the period 1991-2001, as against the annual growth rate of 1.8% for the general population. The other civil departments, incidentally, have a ratio of 0.55 pensioners per employee. However, the high ratio of 1.68 defence pensioners per defence employee implies an extended period of pension payments, which offsets the lower rates of defence pensions. This ought to reduce the defence pensions bill significantly.
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Early induction age and early retirement age implies a younger age cohort for 90 percent of the defence employees compared to their civilian counterparts.ĭue to early retirement, the defence employees do not fulfill the government criteria of 33 years service to earn a full pension. There is an average in-service death rate of 1.2 percent for the defence employees, largely due to counterinsurgency operations. The bulk of this group is of soldiers, who constitute 85 percent of the defence forces. More than three percent of defence employees retire every year. The subterfuge of removing defence pensions expenditure from the overall military expenditure, in vogue since 1985, has turned the spotlight away from this issue. 15,244 Crore in 2007-08 and is currently over two-thirds of the military salary expenses. The defence pensions bill, which is over 50 percent of the central government’s pensions bill, has also risen exponentially since the 1960s. The total strength of the defence employees has risen from nearly 362,000 in 1960 to 1.3 million today. Filed under: Fiscal policy, Human Capital, Regulatory reforms - Pragmatic 10:14 pm
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