Govt has recommended closure of BSNL, MTNL

New Delhi: The Ministry of Finance has recommended the closure of battered state-owned telecom service providers Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL), sources said. The ministry is of the opinion that the cost of closing the two state-run companies would not be as high as Rs 95,000 crores, as was being claimed by the Department of Telecommunications (DoT).

Ministry rejected a bailout package for BSNL, MTNL

The ministry had earlier rejected a Rs 74,000-crore bailout package for BSNL and MTNL. The package was worked out by DoT, who had endorsed bailing out the two PSUs, contending that bailing them out will cost less than closing them down. The sum of Rs 95,000 crore factored in a voluntary retirement scheme (VRS) for all 1.65 lakh BSNL employees and its debt repayment.

Closure could cost less

The ministry has found a novel way of working out the cost of closure for BSNL and MTNL, which indeed works out to be lesser than the bailout package. There are three categories of staff at these two PSUs — those directly recruited, staff who were transferred from other PSUs or government departments and absorbed, and the officers of the Indian Telecommunications Service (ITS).

Direct recruits at BSNL involves mostly junior staff whose salary is not very high. Such employees make up only 10 percent of the total workforce. ITS officers at BSNL, on the other hand, need not be given a VRS because they can be redeployed to other government departments. BSNL and MTNL have been asked to identify staff strength under each category to help calculate the full cost of closure for the two public sector companies, sources said.
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