There are difficulties in deploying and redeploying workers. The issue is compounded by industrial sickness and over-manning of public sector undertakings (PSUs). Besides, there is no monitoring of the allocated funds.
Halfway through the 10-year life given to it at inception, NRF established in February 1992, has still a long way to go. There was an ambitious blueprint for the NRF. It was to put in place efficient systems of skill generation for redeployment, unemployment benefits by way of voluntary retirement schemes (VRS) and labour market information for workers. This was to be rationalised with the technical upgradation and modernisation in the wake of the New Industrial Policy. By offering a social safety net for workers, the NRF hoped to lend a human face to the exit policy.
This social safety mechanism confined itself to catering to 60 weak or sick central PSUs. These were all loss-making enterprises whose net worth had been eroded by 25 per cent or more. These include Indian Drug and Pharmaceuticals Ltd,NTC, Bharat Gold Mines Ltd and the Fertiliser Corporation of India. But the labyrinthine government procedures in allocation and disbursement of funds diluted its effectiveness. Not only could the funds transferred into the Public Account be put to optimum use, the easy option of VRS was more often resorted to rather than reskilling and redeploying workers, which was the primary objective of NRF as it was originally conceptualised.
To begin with, there was no specific fund to talk about. There were some structural adjustment credits received from the World Bank in 1991. This amounted to $500 million, which was earmarked for NRF and also for other employment generation schemes like the Jawahar Rozgar Yojana, as announced by Manmohan Singh, in his 1991 Budget. The World Bank credit was routed through the Consolidated Fund of India, which accumulated all government receipts by way of international bilateral aid, customs, revenue and borrowings. More money was expected to flow in from bilateral sources, financial institutions and industrial undertakings, says an erstwhile official with the department of industrial development. But the funds never came due to the slow progress of the disinvestment process.
The first budgetary allocation of Rs 829.66 crore was made in 1992-93. The outlay for the current financial year is Rs 250 crore. These were placed in the Public Account to avail of the benefit of carry-forwards into the next financial year. As evident from the table, budgetary sanctions did not always match the amount transferred to the public account. This was because the final decision on finances vested with the finance ministry.
Take for instance, the Empowered Authority (EA), a body set up at the inception of the NRF to make recommendations and oversee the disbursement of funds. But the ministry of finance disbursed the funds without so much as consulting the EA, rues a department of industrial development official. The EA comprised of secretaries from the departments of expenditure, public enterprises, company affairs, education, a labour representative and two management experts. The secretary, department of industrial development, was the chairman.
The 60 central PSUs identified for NRF support came under the jurisdiction of 15 different ministries. Their demands for funds were whetted by the finance ministry. According to a department of industrial development official, the allocation of funds was arbitrary. While some PSUs needed more funds than was finally assigned to them, others did not fully avail of those at their disposal. Need-based inter-ministerial transfer of funds had to be ratified by Parliament through supplementary demands. This entailed waiting till the monsoon or winter session, by which time it was often too late. Even within a ministry, transfer of funds from one PSU to another called for the presentation of a supplementary demand.
Again, with no accountability, in the initial years, it was not quite clear how the funds would be utilised. An exception was made in the disbursal of funds when Rs 183 crore was sanctioned to the ministry of textiles over 1992-94 to provide them with working capital. By 1995-96, it was evident that there were serious lacunae in the monitoring of funds. Savings in the public account were increasing due to non-utilisation. More importantly, most of the funds were being channelised for VRS. No investments or efforts were made to follow workers through the post-VRS stage, says a ministry of industry official. The concerned ministries bypassed the EC, making direct requests to the finance ministry. With things beginning to get out of hand, in 1995, the finance ministry invited the EC to play a more active role in regulating the disbursal of funds.
Even so, in the first three years of the NRFs functioning, with 30-odd VRS schemes, the golden handshake consumed most of the allocated funds. But, the number of workers availing VRS has shown a rapid decline over the years (see table), from 39,400 in 1992-93 to 10,387 in 1995-96. In the last five years, more than one lakh workers have taken VRS under the NRF scheme.
But VRS by itself could not solve problems. Workers hoping to live on its interest soon found that the rate of inflation far outstripped their earnings. Without the infrastructure and finances in place, the objectives of reskilling and redeployment languished. And each VRS claimant announced the closing of another employment opportunity for the future, says Rajiv Ranjan, member of the Indian National Trade Union Congress. Adds Arun Kumar of the Hind Mazdoor Sabha, Retrenchment is creating a middle-aged army of unemployed people.
A government survey of 77,989 workers availing of VRS reveals that 50.44 per cent are over 50 years of age and 44.58 per cent are in the age group of 35 to 50 years. Most of these workers did not desire to be retrained or redeployed; it was the self-employment scheme that appealed to them. Efforts were made to tap banks for soft loans to finance self-employment schemes. With banks unwilling to risk such loans, the matter has reached an impasse.
Over the last two years, the EC has been actively following up with retrenched workers. It has identified 49 nodal agencies in areas which see maximum outflow of workers. It has also set up employment assistance centres (EACs) to provide retraining/redeployment or self-employment opportunities. As of January 31, 1997, of the 60,416 workers surveyed in the 49 EACs spread across the country, 19,334 have been retrained on the basis of skill requirements of industries in the area. Workers were trained to be fitters, carpenters, auto repair men. Of those surveyed, 4,488 have been redeployed.
However, an industry ministry official claims it is not the right picture. These redeployment figures are not quite accurate. Random surveys have found that a lot more of the retrained workers have sought employment but through avenues other than those we provided, he says.
But the funds going towards upgrading skills and redeployment is still a minuscule percentage of the total funds allotted, reveal officials. On an average we spend around Rs 6,000 per worker for retraining. We must have spent around Rs 20 crore on such programmes, says an official from the department of industrial development.
Again, till date, central PSUs have been the sole beneficiaries of the scheme. States were demanding a similar fund for state-run PSUs with the Centre contributing 50 per cent towards it. This proposal was agreed to in principle but no further action was forthcoming, reveals an official from the labour ministry.
Meanwhile, the private sector has been clamouring for some scheme to provide a social safety net for their workers. We are looking for some soft loans for restructuring in the private sector. We had suggested an unemployment insurance with contributions from the government, employers and employees too, but nothing happened, says a Federation of Indian Chambers Commerce and Industry (Ficci) spokesman. Employer organisations like the Confederation of Indian Industry, Assocham and the All India Small Scale Industries Undertaking are working as employment assistance centres for organised sector workers from both the public and private sectors.
The organised sector constitutes a mere 8 per cent of the total labour force in this country, which translates into some 27 million workers. Of this, the central public sector workforce is estimated to be around 1.8 million. Every year, since 1992, there has been a three per cent outflow (about 60,000 retrenchments) from this sector. Though no accurate estimates are available, labour redundancy in the organised sector as a whole is estimated to be in the region of 16 per cent. According to trade unions, the International Labour Organisation tried to initiate an employment audit of the years of reform. This was to examine the rate of growth of employment and the quantitative and qualitative effects on it of restructuring, but the labour ministry has not been very cooperative.
And now, the Disinvestment Commission headed by G V Ramakrishna has proposed the merging of the Divestment Fund and the NRF. But the idea has not met with a favourable response. Trade unions argue that disinvestment proceeds will be used as a debt recovery mechanism rather than to effect rehabilitation. The worker-orientation of NRF, it is feared, will be completely diluted. With the reform process picking up pace once again, NRF could go a long way towards increasing security among workers, provided it is administered speedily and effectively.
