The Unified Pension Scheme (UPS), unveiled on Saturday, marks the Narendra Modi government’s most significant effort yet to connect with Central government employees and a segment of the salaried middle class. This scheme is especially relevant to those who currently hold or aspire to secure Central government jobs.

Starting next fiscal year, UPS guarantees government employees a pension equivalent to 50% of their average basic pay over the final year of service, alongside increasing Dearness Allowance (DA) benefits. The scheme will be available to employees who joined the service in 2004 or later, but the existing National Pension Scheme (NPS) will remain an option. Under NPS, employees contribute 10% of their basic salary, with the government contributing 14%. With UPS, the government’s contribution rises to 18.5%, while employees continue to contribute 10% of their basic pay and DA.

Though the UPS benefits only extend to 23 lakh Central government employees, the move signals a broader shift. It sets a precedent for state governments, Central universities established by Parliament, and public sector units (PSUs) to potentially adopt similar measures in the future.

A New Focus on the Middle Class

The Modi government has traditionally focused on the poor through well-publicized initiatives, such as providing free 5-kg food grains to 80 crore families, housing, and gas cylinders. However, this is the first major relief targeted at the middle class in government jobs, a group that has seen fewer benefits in recent years compared to their private-sector counterparts. The UPS represents a shift toward extending welfare measures beyond the poorest segments of society.

This strategy has some similarities to the Congress’s tenure, during which government salaries were significantly increased by the Sixth Pay Commission, and income tax relief was frequently provided. In contrast, the current government has not made similar adjustments to tax slabs.

Political Reactions and Implications

On Sunday, Congress president Mallikarjun Kharge criticized the UPS, accusing the Modi government of making multiple “U-turns” in response to public pressure. He cited examples such as the rollback of policies like the Long Term Capital Gain tax and the Waqf Bill. The Congress also highlighted the BJP’s sensitivity to public perception following its loss of 63 seats in the Lok Sabha elections.

In response, BJP leaders, including Ravi Shankar Prasad, challenged the Congress to fulfill its promise of reinstating the Old Pension Scheme (OPS) in states like Himachal Pradesh. While UPS is not identical to OPS, its benefits for retiring employees are viewed as being closer to the old scheme.

Congress Accusations of “Copying”

The Congress has repeatedly accused the BJP of imitating its policies, particularly those promised in recent months. After the Union Budget, Rahul Gandhi called the exercise a “copy and paste” of the Congress manifesto. This includes policies related to employment and support for Micro, Small, and Medium Enterprises (MSMEs), which were significant issues during the elections.

The Congress also pointed out that many of the government’s announcements, such as employment-linked incentives and support for MSMEs, closely mirrored their own manifesto promises. Despite these accusations, the Congress has acknowledged that the BJP’s adoption of these policies could bring some benefits.

The introduction of UPS signals a broader shift in the government’s welfare policies, aiming to cater to a larger segment of society. How this move will resonate politically remains to be seen, especially as the country gears up for future elections.