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State pension claim vetoed
- Pay Bihar Rs 2584cr, rules Centre

Patna/Ranchi, Oct. 3: The Union home ministry has directed Jharkhand government to pay Rs 2,584.09 crore to Bihar on account of payment of pension and other retirement benefits to government employees who retired before November 15, 2000, when the two states were bifurcated.

The order, received by the Bihar government today, is a blow to Jharkhand which has been contesting Big Brother’s claims for over a decade on division of liabilities as per the provisions of Bihar Reorganisation Act, 2000.

The ministry of home affairs, which is empowered to adjudicate between the two states in case of disputes, said in its order: “The central government hereby directs the government of Jharkhand to reimburse Rs 2,584.09 crore to the government of Bihar on account of adjustment of liabilities of pension and other retirement benefits to government employees up to March 31, 2011 and with respect to the expenditure incurred by the two states on employees retiring before November 15, 2000.”

The MHA order, issued by joint secretary S. Suresh Kumar on September 25, was pronounced under powers conferred upon it under clause (4) of Section 41 read with the Eighth Schedule under Section 53 of the Bihar Reorganisation Act, 2000.

Jharkhand government said the order was based on a “faulty” clause in the act that suggests distribution of assets and liabilities be based on the number of employees instead of the population of both states.

“Every other reorganisation act since 1956 follows distribution of population as a criterion to fix assets and liabilities,” said state finance secretary Sukhdev Singh, who received the order a couple of days back.

“The Bihar Act is discriminating and we have moved the Supreme Court where the matter is pending. The MHA order was passed despite that,” he said adding that if population was considered, the state needed to pay Bihar only around Rs 500-600 crore.

Principal secretary in the Bihar finance department Rameshwar Singh said the MHA’s order was a relief. “But, it (the amount) is not enough in proportion to the state’s demand. Our demand towards interest payment was not taken into consideration,” he claimed.

As per the provisions of the act, after the division of the two states on November 15, 2000, payments made by the successor states in respect of pension and other retirement benefits in every subsequent financial year shall be apportioned between the successor states in the ratio of number of employees of each successor state and any successor state paying more than its due share shall be reimbursed the excess amount by the successor state or state paying less.

The distribution of employees between Bihar and Jharkhand is in the ratio of 2:1 approximately.

According to Rameshwar Singh, Jharkhand had moved the Supreme Court earlier in an attempt to block the MHA from issuing the order. “We will file our counter affidavit in the apex court seeking a direction to the Jharkhand government for making payment towards the interest component,” he said.

Bihar is demanding Rs 4,263.43 crore till 2010-11 for payment of pension and other retirement benefits. Rameshwar Singh said the amount stood at Rs 5,334.84 crore by the end of fiscal 2011-12.

Similarly, Bihar claimed payment of Rs 2,371.54 crore till 2010-11 on account of interest payment. The interest component, Singh explained, had not been calculated for the year 2011-12.

Also, the Bihar government added Rs 2,000 crore — receivable from Jharkhand on account of pensions — in its plan estimates for the current fiscal.

Explaining the reasons behind seeking payment of interest (on a principal of Rs 4,263.43) from Jharkhand, Rameshwar Singh said: “It has been more than 10 years that the Bihar government has been making payments… by borrowing from market at a higher rate of interest.”


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