Cutting down on expenses: MTNL’s VRS plan gets nod

The VRS proposal, to which the unions are also in agreement with, will go to the Cabinet for approval during this month itself, the official said.

By: ENS Economic Bureau | New Delhi | Published:May 1, 2016 1:28 am

The Telecom Commission on Saturday cleared a proposal to offer a voluntary retirement scheme (VRS) to Mahanagar Telephone Nigam Ltd (MTNL) employees who are 50 years of age and above, to save costs, a senior government official said, adding that nearly 80 per cent of MTNL’s expenses are towards staff costs.

“The exchequer can save around Rs 500 crore to Rs 600 crore every year by giving VRS to some MTNL employees. It can earn up to Rs 300 crore every year from its assets such as buildings and towers by renting them out,” the official said.

The official said the government would spend around Rs 2,000 crore towards the VRS. Of this, Rs 1,000 crore will be spent by the Centre towards ex-gratia payment to the employees and the rest will be on account of other settlements.

MTNL has over 40,000 employees, 26,000 of whom will be retiring in the next 10 years. The official said that the government plans to save costs by giving the VRS option to 20 per cent of its employees who are above 50 years of age, which is around 5,312 staffers.

The VRS proposal, to which the unions are also in agreement with, will go to the Cabinet for approval during this month itself, the official said.

To further revive MTNL, the official said that the telecom panel has cleared the PSU’s plan to bid for Delhi government’s tender, as per which security cameras will be set up across the city. This is on lines of Mumbai’s plan to increase vigilance in the metro city.

As of date, the official informed that Mahanagar Telephone Nigam Ltd had a negative net worth of Rs 500 crore and was incurring losses of Rs 2,000 crore per year. The proceeds, from savings made on back of the VRS plan, will not be spent towards hiring more employees, but towards setting up more effective infrastructure.

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