Citing Reserve Bank of India (RBI) projection, Union Finance Minister Nirmala Sitharaman, on Monday, said the inflation would come down to 5 per cent in the first half of the next fiscal year. However, it won’t be possible for the state governments to implement the Old Pension Scheme (OPS) with the funds for the New Pension Scheme (NPS) of employees ‘legally’.

Sitharaman said the inflation rate was below 6 per cent in November last year under a ‘tolerance band’. Now, the RBI projected in its inflation forecast for 2023-24 a gradual decline in the inflation rate to 5 per cent.

Sitharaman, who first held post-budget interaction with businessmen and the media, was accompanied by Pankajy Choudhary and Bhagwat Kishnarao Karad, both MoS Finance, and a few secretaries of finance related ministries who made replies on her replies to the media questionnaires.

“The government of India has taken a number of steps to control inflation by giving incentives and reducing or keeping free import duty in pulses, edible oils including palm crude and palm oil so that their production will be increased in near future and the prices go down,” she said.

During covid pandemic, wheat and rice were given free to poor families till December 2022 so that they could get ‘roti aur chawal’, she said, adding the WholeSale Price Index (WPI) was lowest in the last 24 weeks recently.

“The government is continuously paying attention to inflation control and taking up the necessary measures to manage it within expected limits of the tolerance band of RBI (below 6 pc),” the FM claimed.

Replying on her behalf, one of the team members, V Anantha Nageswaran, chief economic advisor, said, “Increase in inflation rate in January as compared to December was due to the base effect of coming from sudden outburst of heat wave in March last year when the stocks got depleted. This is a temporary phenomenon. We have seen the inflation pass through coming from imported prices; whether it is metal, minerals, edible oils, crude oils on to CPI that has passed away already. We do not see any second round of such effect on these commodities”.

On bringing back the Old Pension Scheme by the state governments of Rajasthan and Himachal Pradesh and urging the Centre to refund the funds from NPS (new pension scheme), Vivek Joshi and TV Somanathan, finance secretaries, categorically replied that the state governments considering that they would get the money back, but it would not be possible and Employees’ Provident Fund Organisation (EPFO) would not agree on it.

“The state governments are shifting from NPS to OPS and demanding funds back. This is not a good trend because they (states) are postponing their own liabilities. Employees think they would be getting benefits. The law is very clear that the state government could not get this fund that belongs to an employee under the NPS Trust agreed by the employee and employer. If anyone makes a premature exit, there would be different terms for return of funds,” Joshi said.

While Somanathan defended the EPFO rules saying the moment money is credited to employees account, it belongs to the employee legally and it can only be disposed of in accordance with the term of enactment which governs the pension fund and cannot be reclaimed by employer in any circumstances that is the legal position.

“That has been clarified by legal authorities which is why the GOI and Pension Regulatory Authority are in no position to return the money legally to the state government. This is a labour protection provision,” he said.

Stressing the inter-group equity and intergenerational equity issues, Somanathan said, “If the state government shifts from NPS to OPS, the burden would shift from the current government to the next government and from this generation to the future generation employees. The employees of NPS would get their pension, except for exception, by 2030 only.”

In a summarised comment the Finance Minister said, “I do not want to predict on OPS as it is the state governments’ decision, and they should not expect the money from NPS…it is impossible.”

On a number of questions related to the demand for discussion on Adani in Parliament and the Opposition demand for JPC, the Union finance minister said the case was dealt with by the Supreme Court.