Voluntary retirement schemes (VRS) at central public sector enterprises (CPSEs) have gathered some extra momentum after the Modi government sweetened the package for employees of sick units in September last year. However, the pace must accelerate further to achieve the stated objectives of closing down hopelessly sick units, turning other ailing ones around and making the profitable ones leaner and more efficient.
After reaching a peak of nearly 34,400 in FY07, the rate of attrition through VRS in chronically sick and other units, including profitable ones, has declined steeply, to just 2,525 in FY15. In comparison, 3,901 persons were offered VRS in sick companies alone in FY17, data gathered by FE showed.
Conventionally, VRS has been the principal tool for reducing the wasteful staff costs of CPSEs. Over the last quarter century, two-thirds of the employee reduction in these state-owned companies has been on account of VRS packages. Non-creation of new posts after retirements and cutting redundant posts through retrenchments have also helped.
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Under the September 2016 scheme of the Modi government, employees are offered VRS packages at notional 2007 pay scales. In addition, all dues including salary arrears will be settled at the time of separation. Prior to this, no settlements; in some cases, the staff had to accept early 1990s pay scales.
Among the 3,901-odd employees belonging to eight sick CPSEs who took VRS in FY17, most belonged to Hindustan Cables, HMT Tractor, Instrumentation Ltd and three other units of HMT.
The number employees who took VRS in the last fiscal year would be higher after such data for profitable CPSEs are included, an official said. However, VRS adoptions happen mostly with sick PSUs.
Sources said VRS numbers could rise further in FY18 given that the NITI Aayog has recommended closure of 26 CPSEs of the 74 identified loss-making CPSEs. There is no production activity in many of these units in over a decade and are a drag on Centre’s finances.
