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Archive for September 19th, 2023

RBI revamps the Online Database (almost like St Louis Fed’s FRED database)

September 19, 2023

I had blogged last year on RBI giving a new look to its online database.

The central bank has once again not just given a new look but also revamped its online database completely. The new database also has a new web address (https://cimsdbie.rbi.org.in/) compared to the older web address (https://dbie.rbi.org.in/).

Do check it out. It is getting closer to the St Louis Fed’s iconic FRED database.

Posted in Central Banks / Monetary Policy, Indian Economy/Financial Markets | Leave a Comment »

Fiscal Costs of Reverting to the Old Pension System by the Indian States – An Assessment

September 19, 2023

A team of RBI researchers (Rachit Solanki, Somnath Sharma, R. K. Sinha, Samir Ranjan Behera and Atri Mukherje) in this very important research article discuss the costs of shifting to the old pension scheme:

As part of the pension reforms initiated in India during the first decade of this century, most State governments adopted the National Pension System (NPS), which is a defined contribution scheme. Against the backdrop of recent discussion in public space about reversion to the Old Pension Scheme (OPS) and with some States actually doing so, this study has been undertaken. It analyses the NPS contribution data of State government employees to estimate the likely fiscal costs that could arise if all State governments revert to the OPS.

Highlights:

- Short-run reduction in States’ pension outgo on account of reverting to the OPS would be eclipsed by the huge rise in future unfunded pension liabilities in the long-run. Pension burden in case of OPS will outpace the NPS contribution for most of the States by the 2030s.
- Under OPS, the estimated actual pension burden will increase by around 4.5 times of the estimated pension outgo under the NPS, with the additional OPS burden rising to 0.9 per cent of GDP annually by 2060.
- At a time when most of the countries are moving towards defined contribution plans, reverting to OPS by the Indian States will be a major step backwards, undermining the benefits of past fiscal reforms.
- Any reversion to OPS by the States would be fiscally unsustainable.

4.5 times!

To know more about pensions and its importance, also hear this Seen and Unseen podcast with Ajay Shah and Renuka Sane