With assembly polls due in Tamil Nadu, Kerala in two years, South goes into 'study' mode on UPS
Kerala headed to assembly polls in two years, the southern states are carefully weighing their response to the Unified Pension Scheme (UPS) announced by the Centre on August 24.
Less than two months ago, Karnataka announced a major increase in salaries of government employees, entailing an additional annual expenditure of Rs 20,206 crore.
The UPS features have put the southern states in a bind as four of them are ruled by opposition parties and have been bogged down by welfare expenditures and additional burden arising out of implementation of pre-poll guarantees.
“We are yet to get full details and the picture. We will examine it with a positive and open mind,” Karnataka’s revenue minister Krishna Byre Gowda, who represents Karnataka on the GST Council, told ET.
Under the National Pension Scheme (NPS), the states contribute 14% of the basic salary plus dearness allowance (DA), while employees contribute 10% of basic salary plus DA every month. Kerala, however, has been making a 10% matching contribution due to its grave fiscal situation.
Kerala and Tamil Nadu are scheduled to go to the polls in 2026. Karnataka and Telangana had assembly elections last year, while Andhra Pradesh has just had its new government. The employee unions want revival of the Old Pension Scheme (OPS), a prospect experts say will exact a huge cost on welfare programmes. Tamil Nadu and Karnataka are studying the implications of a switch to the UPS, but much depends on the Congress party’s stand, said people familiar with the matter.
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