Burdened with hopelessly sick undertakings and a bloated, unproductive workforce, the Mamata Banerjee government has sought soft loan of about Rs 350 crore from the Asian Development Bank (ADB) to offer voluntary retirement scheme (VRS) to a section of the employees.
The state transport department and the corporations under it are a prime target of the VRS. The government has taken an in-principle decision to offer VRS to employees of 16 state public sector undertakings that are beyond revival.
Some of these PSUs are West Dinajpur Spinning Mill, Shilpa Barta Press and West Bengal Tea Development Corporation.
This is the second time that the state government has sought funds from abroad to retire its employees.
In 2002, the reformist communist chief minister Buddhadeb Bhattacharjee created history by securing a loan of about Rs 150 crore loan from UK’s Department for International Development (DFID) to offer VRS for the employees of different state public sector undertakings that were beyond revival. However, that was a grant -- DFID does not offer loans -- and the government did not need to pay it off.
Employees of a few companies such as Sunderban Sugarbeet and Indian Paper Pulp Company were retired and the undertakings were closed down.
Down the years, most of these undertakings turned into a big drag on the state exchequer that was (and still is) groaning under a mountain of debt.
“This time the area of the proposed VRS coverage will be wider than the 2002 project and will target more employees. Therefore, the requirement will be much more around Rs 350 crore,” said a state finance department official.
The government has sought loans from the ADB as this multilateral institution offers soft loans that carry a payback period in excess of 15-20 years and a low rate of interest. The state government does incur a lot of debt regularly but it carries a higher rate (8% +) and is usually consumed by salary, wages and retirement benefit bills.
“The state government is awaiting the sanction from the department of economic affairs under the Union finance ministry to raise the ADB loan,” he said.
State government sources told HT that the VRS is mainly targeted towards the overstaffed departments such as transport and textiles, as well as different autonomous corporations or undertaking under different state government departments.
“The government has taken an in-principle decision to offer VRS to employees of 16 state public sector undertakings. Absorbing the employees of these 16 sick entities in other state government bodies is beyond question,” said the official.