More than 1.36 lakh serving government employees will be directly benefited from the decision. It will involve an additional financial liability of Rs 1,000 cr during 2023-24.

The state cabinet under Chief Minister Sukhwinder Singh Sukhu, which met on Friday, cleared the decks for its implementation from the next financial year. Sukhu said the government will raise resources to mobilise funds for meeting the liabilities.

“Restoring OPS in the state was one of the 10 guarantees given by Congress in the elections. There should not be any doubt about the government’s intentions to fulfil all promises. This is despite the state's poor fiscal health and a debt liability of Rs 75,000 cr,” said Chief Minister Sukhu, who also pledged to release a “white paper” on Himachal Pradesh’s finances inherited by the Congress government.

“The cabinet has decided that from April 1, 2023, the old pension will be fully implemented and the contribution of the New Pension Scheme will stop being deducted. The new thing is that Himachal has made its own model to restore the old pension,” said Jagat Singh Negi, the state’s revenue minister.

While all employees appointed after 2003 will be brought under the ambit of the old pension, they will be given the option to choose between the OPS and NPS – making it a flexible scheme.

The modalities worked out by the state‘s finance department also refers to granting all benefits of the OPS to those employees who had retired after May 14, 2003 – a cut-off when the then-state government led by Virbhadra Singh had opted for implementing the OPS.

Significantly, the cabinet also adopted a resolution asking the centre to return the state government’s contribution of Rs 8,000 crore. No deductions will be made from the salaries of the employees as was being done under NPS till now.

“No deductions would be made from the employees from their salary under NPS from April 1, 2023. If any employee wants to be governed under NPS, he can give his consent to the Government for the same,” said Negi.

Till now, Rajasthan and Chhattisgarh governments – both Congress-ruled states – and Punjab have restored OPS for its employees even as the Centre had made it clear in the Parliament that contributions made towards NPS by the employees or state governments can’t be returned to the state.

The Congress government has been under fire from the BJP for taking repeated pretexts of the state’s precarious fiscal health to fulfil its promise on OPS, which has been the biggest factor favouring its return to power.

“Though we had taken a decision in principle, during the first cabinet meeting to implement OPS. Today, we cleared all confusion and suspense on its modalities” Sukhu told Outlook here.

Yet, he reiterated his charge that the BJP had left back a debt of Rs 75,000 crore, besides a liability of Rs 11,000 crore payable to the government employees as arrears of pay revisions.

“Additionally, over 900 institutions were opened and upgraded during the last six months of the previous government, which would have resulted in an additional burden of Rs 5,000 crore on the state exchequer,” he added.