The voluntary retirement scheme offered by the central government to employees of state-owned telecom companies BSNL and MTNL seems to have been a hit, going by the response so far.
As of last Wednesday (Nov 27), a total of 79,101 employees of BSNL and 14,050 employees of MTNL have applied for VRS under the scheme.
This indicates a high degree of acceptance for the proposal, given that some Left-oriented workers unions had opposed the VRS scheme for not offering enough benefits.
As of the beginning of this financial year, BSNL had around 176,000 employees and MTNL around 22,000 employees.
The VRS has been based on the ‘Gujarat Model’, under which employees will get a sum equal to 35 days of salary for each year of completed service, plus 25 days worth of salary for each year of service left till retirement.
The scheme is open only for employees who are at least 50 years old.
The total amount to be paid to employees (ex-gratia) who opt for VRS has been pegged at Rs 17,169 cr.
The ex-gratia (one-time payment) on VRS wil be paid in two installments of 50% each during the current financial year and during Apr-Jun of next year. It will be supported via budgetary allocation from Government of India.
In addition to the Rs 17,169 cr of one-time VRS payment, MTNL and BSNL will also have to start paying pension to the employees who opt for the VRS earlier than usual.
This additional impact of early pension liability is estimated at Rs 12,768 cr, according to government’s letter to MTNL.
The uptake numbers indicate that nearly three-quarters of MTNL employees are 50 years of age or older, while close to half of BSNL employees fall into the same age bracket.
The VRS scheme, which was opened on Nov 4, closed yesterday. The final tally has not been disclosed by the companies yet.
The VRS scheme is part of a revival plan for the company approved by the government on Oct 23.
The plan also envisages the merger of BSNL and MTNL so as to facilitate a pan-India footprint, greater synergy in operations, a reduction of fixed costs and overheads, sharing of technical infrastructure and the ability to offer better services.
The government has also approved a scheme to provide ‘free’ 4G spectrum to the companies.
The government today also clarified in a statement that it has no plans ‘currently’ to shut down either BSNL or MTNL.
The two companies have been on a downward spiral after private companies were allowed into the telecom sector in the 1990s, and slipped into losses almost a decade ago.
Consumers preferred to get their connections from private companies as BSNL and MTNL’s levels of customer service left much to be desired.
The companies have since then conducted many internal workshops and awareness campaigns to improve staff behavior towards customers in an effort remain relevant in the post-monopoly era.