The Rs 70,000-crore bailout package for the ailing Bharat Sanchar Nigam (BSNL), approved by the Cabinet last month, will go up by several thousand crore if the government accedes to a demand by the employees' union for revision of pay scales with effect from January 1, 2017.
As is known, the biggest chunk of the bailout package is the nearly Rs 30,000-crore voluntary retirement scheme (VRS) through which the government plans to trim the company's huge workforce of nearly 1.65 lakh, which eats up 77% of its revenues.
Now, the All India Bharat Sanchar Nigam Executives Association has written to telecom minister Ravi Shankar Prasad that before the VRS is effected, there should be a salary revision of the employees with effect from January 1, 2017. Since the payout by way of VRS and pension benefits are calculated on the basis of the last drawn salary, any upward revision will push up the cost by several thousand crore. That's not all, for employees who do not opt for the VRS, the company will have to foot a higher wage bill by way of allowances and perks.
The direct recruits to BSNL last got a pay revision in 2007. They did not get a pay revision in 2017 since the company was by then loss-making and did not qualify under the department of public enterprises guidelines. The employees' union in a recent letter to Prasad have urged that their industrial dearness allowance (IDA), equivalent of dearness allowance of central government employees, be merged up to 50% with their basic pay. Currently, the employees' IDA is 119.5% of the basic salary. This means that if the current basic salary is Rs 100, added with IDA it becomes Rs 220. If 50% of the IDA is merged, then the basic salary will increase to Rs 150, to which then the remaining 70% of the IDA will get added, taking the basic pay to Rs 255. Since, house rent allowance (HRA) and other such benefits are calculated as a percentage of the basic salary all such components will go up.
At one stroke, thus the employees would get higher payout as VRS, pension, and the government's budget would go up by several thousand crores. Those who do not opt for VRS may get entitled to other benefits like an official car, etc, which would add up to the cost of the wage bill.
Analysts said that the government should categorically reject the union's demand because the entire rationale adopted by the government was that a Rs 70,000-crore bailout package will cost the exchequer less than Rs 95,000 crore which would be the cost of the closure of the company. "If the cost of the package rises substantially by acceding to such demands then the rationale gets defeated," analysts maintained.
If at all, the government accedes to the demand of the unions, its optimistic projection underlying the revival economics would also go haywire. Currently, the government maths is that BSNL, which posted a net loss of Rs 13,804 crore in FY19 will, as a result of the package, see it widen to Rs 18,231 crore in FY20 but thereon it will start narrowing and come down to a loss of Rs 5,432 crore in FY21. It will post a net loss of Rs 396 crore in FY23 and then break into a profit of Rs 2,235 crore in FY24.