Controversy over Central aid to Visakhapatnam Steel Plant

The Centre’s announcement of Rs. 11,440-crore financial assistance for the cash strapped Visakhapatnam Steel Plant (VSP) has drawn sharp criticism, with many alleging it is a step toward privatisation disguised as support. “Coalition leaders, who remained silent during four months of unpaid salaries for employees, are now celebrating the package despite its stringent conditions,” said a senior employee, expressing scepticism about the government’s intentions.
The announced aid comes with limitations, rendering it inadequate for addressing the immediate needs of the steel plant. Notably, the funds cannot be used for employee salaries or to procure essential raw materials. This approach contrasts sharply with the Rs 15,000-crore granted to the Visvesvaraya Steel Plant in Karnataka, which has a much smaller production capacity of 0.5 million tonnes, and faced no such restrictions.
“VSP, with a capacity of 7.3 million tonnes, has been allocated Rs, 11,440 crore but under stringent terms,” pointed out Ayodhya Ramu, vice-president of the Steel Workers Federation of India (SWFI), highlighting the disparity in treatment.
A significant portion of the aid is earmarked for addressing financial liabilities. By December, Rs 7,350 crore must be paid to banks, while Rs 1,400 crore is designated for clearing dues to suppliers such as Tata and JSW. Additionally, Rs 500 crore has been set aside for a Voluntary Retirement Scheme (VRS), affecting 500 employees. By year-end, 1,200 retirements are anticipated, requiring Rs 1,500 crore in payouts. Furthermore, 2,000 contract workers are slated for dismissal, with the process already underway.
Although the total aid announced is Rs 11,440 crore, it includes previously allocated funds such as Rs 500 crore from the Steel Ministry and Rs 1,140 crore as a loan from the Finance Ministry. This leaves a net amount of Rs 9,800 crore to be disbursed by March. However, none of this money is allocated for procuring raw materials or operational expenses, raising concerns about the feasibility of running the plant’s three blast furnaces.
Critics argue that the package fails to address the broader issues plaguing the steel plant. “The displaced families who provided thousands of acres of land for VSP have been ignored, with no compensation or assurances of job security,” stated Naiduamma, who parted her land to setting up of VSP.  In fact, many of these displaced individuals, employed as contract workers, are now being laid off. Furthermore, the Union Cabinet’s 2021 resolution for 100 per cent disinvestment remains intact, leaving the spectre of privatisation hanging over the plant.
“The Centre’s move has been labelled a superficial attempt at support, benefiting private interests rather than ensuring the long-term revival of VSP,” asserted former Minister and YSRCP leader Gudivada Amarnath. Without addressing critical issues like unpaid salaries, operational funding, and job security for displaced workers, the announced package appears more like a prelude to privatisation than a genuine effort to sustain the steel plant. Coalition leaders have been called upon to clarify how this package will ensure the plant’s revival amidst these unresolved challenges.
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