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A State Hits The Brakes By Anand Kumar & Sandhya Ravishankar

A ‘Freebie’ state, mismanaged finances & political uncertainty hit the bus commuter hard in Tamil Nadu

 On January 04, the 23rd round of talks took place at Pallavan House, Chennai, between restive labour unions and officials of the Tamil Nadu State Transport Corporation (TNSTC). All 46 unions were present at the meeting.

There were two key demands being put forth by the unions – (a) A hike in basic pay of 2.57 times and (b) immediate restoration of all pending dues including provident funds, gratuity and other benefits to retired employees of the Corporation.

Midway through the meeting, one group of labour union representatives walked out in protest. The Corporation had offered them a hike of 2.44 times in basic pay and had requested for some more time to clear the pending dues totaling Rs 748 crore. The union affiliated to the ruling All India Dravida Munnetra Kazhagam (AIADMK), the Anna Thozhirsangam (Anna Trade Union) stayed in the room. Along with them, 14 other recognised unions stayed back. This amounted to 70% of the total representation of the workers in the TNSTC – and this is mainly thanks to the membership of the union affiliated to the ruling party which counts amongst its members, close to 70% of the entire strength of the TNSTC.

Without an opposition union, the deal was struck and signed between the TNSTC and the Anna Trade Union and 14 other smaller unions. The opposition Dravida Munnetra Kazhagam’s (DMK) Labour Progressive Front (LPF), the CPM’s Centre of Indian Trade Unions (CITU), the Congress’ All India Trade Union Congress (AITUC) walked out and within five hours had announced an indefinite strike.

Chief Minister Edappadi K Palanisamy on January 10 announced that the Rs 748 crore worth of pending dues would be paid before the harvest festival of Pongal which falls on January 15. The government would manage this through a loan for the same amount from State Bank of India, he stated in the Assembly. This will take the debt of the heavily bleeding Transport Corporation from Rs 10,547 crore currently to over Rs 19,000 crore.

PWC Davidar, Transport Secretary of Tamil Nadu told The Lede that the demand for 2.57 times hike in pay had already been met. “In 2013, we had given the transport workers a 5.5% hike, which translates to 0.13 times,” said Davidar. “Now we have agreed to 2.44 times, which takes the total to 2.57 times as they have demanded. This is an additional Rs 1000 crore cost to the department.”

Davidar points out that every government department has a review of pay only once in 10 years and a hike of 2.57 times is the norm. “In the transport department, we have held wage settlement meetings every three years and been giving hikes,” he said. But the unions are not budging from the figure of 2.57 times. Insiders in the Transport Corporation state that if an additional 0.13 times hike was given, it would mean that the workers of one department would get more hike than the rest of the government employees. 0.13 times works out to Rs 272 crores, something that the debt-ridden Corporation simply cannot find.

Lack Of Trust

The problem finds its genesis in 1996 when the TNSTC decided to set up a Trust. Called the Tamil Nadu Transport Corporation Employees (Pension) Provident Fund Trust, this body would be a corpus of funds generated from the employee and an equivalent share contributed by the Transport Corporation. The Trust would invest the corpus in government securities and make payouts to retiring employees.

In 2003, it was decreed that 60% of the Provident Fund amount accrued by the employee would be handed over to him/her upon retirement. The other 40% would be invested in the share market and would be paid as monthly pension.

What started as a Rs 750 crore Trust in 1996 is now worth Rs 7.3 crore with Rs 156.55 crore in government securities, as per the Transport Department’s affidavit in the Madras High Court in November 2017. For the financial year 2017-18, the Transport Department is staring at a shortfall of Rs 1183.07 crore for its commitment to pay pensions as well as PF and gratuity, life insurance and other benefits together. The projected shortfall for the financial year 2018-19 is Rs 1386.67 crore.

How did this happen?

The mess began in the financial year 2005-06, as illustrated by the table below.

Year Annual Loss (Rs Crore) Cumulative Loss (Rs Crore)
2001-02 (Fare hiked) -98.86 -2130.05
2002-03 -4.21 -2134.26
2003-04 2.38 -2131.88
2004-05 27.62 -2104.26
2005-06 -392.18 -2496.44
2006-07 -281.81 -2778.25
2007-08 -379.57 -3157.82
2008-09 -723.15 -3880.98
2009-10 -734.71 -4615.68
2010-11 -1535.26 -6150.95
2011-12 (Fare hiked) -1791.64 -7942.59
2012-13 -856.53 -8799.12
2013-14 -1265.98 -10,065.10
2014-15 -2653.99 -12,719.09
2015-16 -2600.25 -15,319.34
2016-17 -2981.57 -18,300.90
2017-18 (Upto Sept 2017) -1527.72 -19,828.62

*Source: State Transport Department affidavit in Madras HC, November 2017

What exactly happened in that year? The DMK government came to power in 2006 on the back of an historic electoral promise that would set the state firmly on the path of freebies, with the announcement of free colour televisions to the voters of the state. Another popular scheme was that of one kilogram of rice for Rs 2 available through PDS outlets in the state. AIADMK leader J Jayalalithaa would make available 20 kgs of rice free of cost when she came to power in 2011.

The term ‘welfare state’, something Tamil Nadu boasts of being, would be taken to an all new level, as competitive freebies between the two main Dravidian parties, the DMK and the AIADMK would eat heavily into the exchequer of a tottering state in the years since.

“If we have an honest administration with bureaucrats who are not corrupt, such a situation would not have arisen,” renowned economist Venkatesh Athreya told The Lede. “The root of the problem is the lack of transparency largely in procurement. This is a service sector so we cannot expect profits. At the same time it is not the failure of the Transport Corporation alone. It is the failure of the functioning of the overall state government. As for freebies, I believe rice is an essential commodity so there is no harm in subsidising that. But is it necessary to have given free colour TVs and mixers grinders? Tax sops given to large corporates is much more of a burden on the economy than these freebies,” he said.

The accusation of the labour unions of PF deducted from their salaries not being debited into the Trust corpus is not far off the mark. “You tell me what can be done when the Corporation is incurring losses of Rs 9 crore a day? This is cash loss. So we are paying the bare basics – salary, diesel and pensions. Whatever else can be delayed, we are pushing it back. The government is not going to run away with anybody’s money. It will come but it will be delayed,” said a senior source in the Transport Department.

Bureaucrats are frustrated with the politicians. In the last six years, Karnataka has hiked bus fares 11 times, Andhra Pradesh has hiked fares 7 times and Kerala has hiked fares 8 times. Tamil Nadu has increased bus fares only twice. Take a look at the table below for the ‘ordinary’ or mofussil bus fares in 2011 and 2017 for the four southern states.

State Mofussil (Ordinary) bus fare in 2011 Mofussil (Ordinary) bus fare in 2017
Tamil Nadu 42 paise/km 42 paise/km
Andhra Pradesh 50 paise/km 63.7 paise/km
Kerala 55 paise/km 64 paise/km
Karnataka 46.44 paise/km 59 paise/km

*Source: State Transport Department affidavit in Madras HC, November 2017

“How can we run a Corporation if there is no income?” they ask.

Concessions have only risen and more people have been brought under the concessions and free fare bracket. In early 2016, then Chief Minister Jayalalithaa announced a scheme by which senior citizens can avail of free bus transportation. In 2017-18 alone, the state government has sanctioned an amount of Rs 22.9 crore towards concessions for senior citizens, Rs 530.63 crore towards concessions for students and Rs 595 crore towards purchase of diesel to the Transport Corporation.

A mismanaged and inefficient public sector corporation has and is digging itself into a financial hole. And when political uncertainty is in the air, it is an opportunity for opposition affiliated labour unions to hold the state government to ransom. The Lede had detailed how even the ruling party affiliated union had splintered, leading to a debilitating strike, all thanks to a split in the ruling party. You can read that report by Anand Kumar here: http://www.thelede.co.in/transport-unions-bring-a-weak-government-to-its-knees-by-anand-kumar/

Unrest In More PSUs

In the wake of the agitation by the transport workers, unions of a number of state government departments have been encouraged to press for their demands. Unions in the state power utility TANGEDCO (Tamil Nadu Generation and Distribution Corporation) claim there are 22,000 vacant posts in the Helper category alone. Their demand is to fill the vacancies immediately.

“Those working in thermal power stations are mostly in the Helper category, so if they go on strike, the state’s power supply will get disrupted,” said Rajendran, General Secretary, TANGEDCO employees’ CITU union. “It is better if our demands are met instead of forcing us to do strike like transport employees. If we do it, the state will be in the dock,” he told The Lede. This union has issued notice to TANGEDCO stating that they will strike work on January 23.

TANGEDCO officials were unavailable for comment as the Assembly is in session.

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