The implementation of the one rank one pension (OROP) scheme would cost Rs 7,500 crore on an annual basis, the government said in an official statement on Wednesday.
The arrears, payable for the period from July 2014 to December 2015, would cost about Rs 10,900 crore.
The implementation of the OROP scheme will increase the defence budget for pensions to Rs 65,000 crore in 2016-2017 (proposed budget estimates), up from Rs 54,000 crore envisaged in the budget estimates for the year 2015-2016.
The payment of arrears and revision of pension under the OROP scheme will be made in four instalments, except for family pensioners and pensioners in receipt of gallantry awards, who will be paid arrears in one instalment, the statement said.
The notification for the implementation of the OROP scheme was made on 7 November, 2015, after which the government appointed Justice L Narasimha Reddy, retired Chief Justice of the Patna High Court, to head the Judicial Committee to look into the implementation of the scheme.
The terms of reference for the committee were:
â€¢ Measures for the removal of anomalies that may arise in the implementation of the OROP as notified by the government on 7 November, 2015.
â€¢ Measures for the removal of anomalies that may arise out of inter-services issues of the three forces due to implementation of OROP order as notified by the government on 7 November, 2015.
â€¢ Implications on service matters.
â€¢ Any other matter referred by the Central government on implementation of the OROP or related issues.
The announcement comes a day after the service chiefs of Army, Navy and the Air Force met Defence Minister Manohar Parrikar to address eight "critical issues and persisting core anomalies" before the government goes ahead with the implementation of the proposals of the 7th Central Pay Commission.
The three service chiefs -- Air Chief Marshal Arup Raha, Admiral Robin Dhowan and General Dalbir Singh Suhag -- met Parrikar on Tuesday.
"The meeting, which also discussed measures to implement the one rank, one pension (OROP) notified on November 7 for ex-servicemen, was held in a constructive manner. The minister said he would ensure concerns of the armed forces are suitably addressed," said a defence ministry source, according to The Times of India.