BSNL may junk VRS plan; all future recruitments to be on contract basis

The wage bill for around 70,000 Bharat Sanchar Nigam (BSNL) employees, who are over 55 years old, will be equally split between the Department of Telecommunications and the Centre, according to a proposal in the works. After this, all recruitments would be on contractual basis to keep the wage bill low. 

This proposal, which rules out the need to roll out a voluntary retirement scheme (VRS) immediately, would be taken up for consideration on Thursday at a meeting headed by the Cabinet secretary. Possible merger of BSNL and Mahanagar Telecom Nigam  (MTNL) is to be discussed, too. 

A senior official said there were other proposals, too, on the revival of the PSU telecom major that would be discussed in the Thursday meeting. 

“If this proposal is accepted then there would be no immediate VRS roll out,” the official told Business Standard. According to the proposal to be presented by the DoT before the Cabinet secretary, 50 per cent of the wage bill for the excess employees (around 70,000 people who are expected to retire in five years) would be borne by the DoT and the remaining by the Centre. 

Future recruitment in the company would be on contractual basis, saving the company pension payment in the coming years and several other allowances that the permanent employees are entitled to, sources claimed. 

Multiple proposals pertaining to employees of the two sick PSUs are to be discussed with the Cabinet secretary on Thursday and the one which is monetarily feasible will make the cut.

The government is deliberating several options before it finalises the revival package for the two PSUs that are grappling with financial stress. It is also expected to lower the retirement age for employees of both the companies to 58 years from the current 60 years.

“There seem to be a consensus on all issues except the ones relating to employees, their salaries, VRS, etc. Therefore, a couple of options would be up for discussion in the meeting with the Cabinet secretary,” the official quoted above said.

According to a DoT official, the bailout of BSNL and MTNL requires making available 4G spectrum to the companies besides VRS, funds to meet capex requirement including finances to buy equipment for the 4G spectrum use. 

“All these things have to be carefully studied before the bailout package is finalised. We have already had several rounds of deliberations on the matter,” he said. It is also learnt that the merger of BSNL and MTNL is back on the table and will be deliberated upon in the meeting.

Both BSNL and MTNL sought relief from the government in the form of financial stimulus. The government had assured the two PSUs of revival packages of a certain kind.

About half the 176,000 employees of BSNL are estimated to retire in five-six years. If only about 50 per cent of the eligible employees (those aged about 50 years) opt for the VRS, which would be 40,000 people. BSNL’s debt is Rs 13,500 crore. 

The VRS payout will include 35 days’ salary for each year of service and 25 days’ salary for the remaining years. MTNL has 22,000 employees, of whom 16,000 will retire in five-six years. The VRS is expected to be funded through issuing 10-year bonds, which will be repaid through lease revenue earned by monetising land assets.

The company has loans worth Rs 20,000 crore on its books, which were taken by MTNL for paying the government statutory dues.

MTNL wants the government to convert these loans into loans with sovereign guarantees with full responsibility of prinicipal and interest payment, which is expected to save the company Rs 2,000 crore annually towards interest payment.

The employees also want the voluntary retirement scheme after the implementation of the third pay revision, which translates into Rs 300 crore increase in employee benefit towards MTNL.

In its revival plea to the central government, MTNL had expressed willingness to venture into fourth-generation or 4G services provided they are fully financed by the government.