Privatisation and the Voluntary Retirement Scheme

The voluntary retirement scheme of public sector enterprises is built on the narrative of overstaffing and inefficiency. With Bharat Sanchar Nigam Limited being the latest to announce a massive VRS, this article examines the path that led to this package. It argues that it is one of the instruments through which labour flexibility is ushered in public sector enterprises, which often end in privatisation. It also discusses the crucial role that BSNL could take up by virtually connecting the physically distanced in the resistance against the ongoing pandemic.

In early 2020, the Government of India (GOI) announced a voluntary retirement scheme (VRS) for workers in Indian Railways. The professed intention was to rationalise the surplus humanpower by 30% such that the railways would become more efficient. Two months later, in July 2020, the Minister of Railways announced the entry of private players in the sector. According to current plans, a substantial part of the railways would be managed by the private sector by 2023. Air India, the ailing national flyer, had been trying for a 100% disinvestment, without success. However, the trade unions in the sector anticipate massive shedding of staff and have raised claims for a VRS (Financial Express 2020). Privatisation of public sector enterprises (PSEs) and VRS in these PSEs had been occurring simultaneously since the early 2000s. The Bharat Aluminium Company (BALCO) announced VRS in July 2001, which followed just after the strategic sale in March 2001. Modern Food Industries Limited (MFIL), another PSE, mooted VRS just after privatisation (Department of Investment and Public Asset Management 2020). VRS was offered to employees of Hindustan Machine Tools (HMT) just before closing it down (Economic Times 2016).

In most of the above cases, the stated goal of the scheme was to increase PSE efficiency, yet the end outcome was privatisation of these companies. It seems that VRS is the preparatory move towards privatisation of the sector. Ever since economic liberalisation, the dominant discourse that overstaffing was the source of public sector inefficiency has been ingrained into the public imagination. So, when VRS for a PSE is proposed, it is often argued and taken for granted that it was aimed at enhancing public sector efficiency. Why, then, do firms get privatised after VRS?