The decision to increase the retirement age will become applicable with immediate effect and all those employees due to retire on May 31 or after that will get the benefit. The benefit, however, will be not be available to those on extension in government job.

Simultaneously, the council of ministers, which met earlier in the day, decided to increase the recruitment age for government employees by two years. Accordingly, the maximum age for entry into government job has been fixed at 30 years. Scheduled caste and scheduled tribe candidates will continue to enjoy similar age concessions over the maximum permissible age.

As many as 90,000 civil and 55,000 defence personnel retire every year. The outgo from the exchequer as supernnuation benefits,gratuity, leave encashment to the employees amount to Rs 5,200 crore per annum. According to sources in the finance ministry, out of Rs 5,200 crore, about Rs 3,000 crore goes to retiring government employees and the rest to employees in defence, railways, telecom and posts.

The government, sources, said, will be able to defer payments to the tune of about Rs 5,000 crore in the remaining eleven months of the current financial year. Also, similar benefits will be there in the next financial year as the employees due to retire on May 31, 1998, shall now retire on May 31, 2000.

According to official spokesman, the rationale behind increasing the entry and the retirement ages was that an individual now remains in service for a period of 33 years to become eligible for full pension benefits.

He also said that the retirement age was being increased for government employees in line with the prevailing practice in neighbouring countries like Pakistan and China.

Although heavyweights in the bureaucracy and alarge number of government employees on the verge of retirement are celebrating the decision of the government to increase the retirement age, the move will also have a chain reaction in other sectors. There is likely to be a similar demand from state government employees and the staff of the banks, financial institutions, insurance companies and public sector undertakings.

Also, the government move to keep its employees for two years more in service is also not in line with the spirit of the ongoing economic reforms process.

While, on one hand, the efforts were being made by the government and the public sector undertakings to get rid of extra manpower, the decision to increase retirement age would mean that the excess staff remained with the employer for a longer period of time.

The pain of keeping employees for longer period will be felt more by the public sector undertakings, banks, financial institutions and insurance companies which are trying hard to get rid of excess flab through innovativevoluntary retirement schemes (VRS).

Although initially the government can take comfort from the fact that it will not be required to pay any retirement benefits for the next two years, the burden of deferred liabilities will continue to mount with an increase in salary and number of years of service for retirement employees.

As far as senior bureaucracy is concerned, the heartburning has already begun among officials due for empanelment for the post of secretary. Now they will have to wait for two more years as their seniors will take time to leave office.