The Finance Ministry has rejected a Rs 74,000-crore package proposed by the department of telecom (DoT) for the revival of beleagured telecom firms BSNL and MTNL. Turning down the bailout package, the ministry has asked DoT to come up with another proposal to breathe life into the ailing state-run entities, a Financial Express report said citing sources.
The proposed package by DoT included an attractive VRS package to BSNL’s 1.65 lakh employees and reducing their retirement age from the current 60 years to 58 years. The proposals on VRS and retirement were expected to reduce the salary burden of BSNL. It is to be noted that in FY19, about 77 per cent of its revenues were spent in giving salaries.
DoT came up with the bailout package after calculating the cost of closing down the entities. It was estimated that as opposed to the revival package that would cost Rs 74,000-crore, closing down the firms would prove more costly at Rs 95,000 crore. According to the telecom department, closing down BSNL would require providing VRS to all its employees, in addition to repayment of its total debts, which in total would cost around Rs 95,000 crore.
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The components of the revival package included a Rs 29,182 crore worth VRS payout for employees, Rs 10,993 crore worth retiral benefits payouts, Rs 20,410 crore for allotment of 4G spectrum and another Rs 13,202 crore in terms of capex required for roll-out of the 4G services. DoT's proposal also included financial projections, detailing a roadmap for BSNL to turn profitable by March 2023.
Reportedly, the finance ministry turned down the DoT package soon after the meeting convened by the PMO for revival of BSNL and MTNL turned inconclusive on Friday. It is learnt that the group of secretaries has been asked to study that matter in four-five days.