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The Unified Pension Scheme (UPS) announced by the Indian government has sparked a wave of deliberations among southern states, especially those gearing up for assembly elections in the next two years. Tamil Nadu and Kerala are scheduled to hold polls in 2026, and the UPS's implications on state budgets and public sentiment are being carefully analyzed. The scheme, which provides an assured pension amount upon retirement for government employees, requires increased contributions from states, putting them in a delicate position.
Karnataka, which recently announced a major salary hike for its government employees, is facing a critical fiscal challenge. The state's revenue minister, Krishna Byre Gowda, expressed concerns about the financial burden associated with the UPS. He highlighted the 'injustice' faced by Karnataka in terms of devolution of funds and loss of goods and services tax compensation from the central government. The state is hoping for a more favorable outcome from the 16th Finance Commission to mitigate the financial strain.
Kerala, known for its strong social welfare programs, has also formed a ministerial committee to examine the UPS. The state's law minister, P Rajeeve, indicated that Kerala's existing fiscal constraints will necessitate careful consideration of the scheme's impact. The committee will analyze the expert committee report on a revised contributory pension scheme before formulating a definitive stance on the UPS.
Source: With assembly polls due in Tamil Nadu, Kerala in two years, South goes into 'study' mode on UPS