To
Shri H D Kumaraswamy
Union Steel Minister
I invite your attention to my earlier letter addressed to you on the subject (https://countercurrents.org/2024/06/welcoming-the-revival-of-hmt-instead-of-disinvesting-cpses-they-need-to-be-supported-and-empowered-beml-rinl-are-examples/) and my follow-up letter to Union Finance Minister (https://countercurrents.org/2024/08/extending-financial-help-to-rinl-will-further-national-interest-more-than-in-giving-a-huge-subsidy-to-the-profiteering-usa-company-micron-set-in-gujarat)
The employees of RINL and the citizens of the north Andhra region have welcomed your visit to RINL in July and your assurance that you would endeavour to maintain the public sector status of the CPSE (/https://www.thestatesman.com/india/h-d-kumaraswamy-rules-out-privatisation-of-rinl-1503319418.html)
Perhaps as a result of your intervention, the AP State government has extended the existing lease in favour of RINL for a manganese mine in adjacent Vizianagaram district, providing considerable relief to RINL.
RINL would have remained financially viable and played its role as a leader in the steel sector but for a combination of ill-advised steps taken by the Centre. I have extracted below a portion of my letter on the factors that have weakened the RINL:
“RINL could have been supported financially from the Central budget to revive one of its blast furnaces but, instead, the Centre forced it to outsource it to a private company, though the same NDA government has had no hesitation whatsoever in announcing a massive subsidy of Rs 2,00,000 crores over five years to profit-earning private companies in the guise of the so-called PLI scheme, as a part of which it recently agreed to provide more than Rs 13,000 crores subsidy to a US company, Micron, to set up a semiconductor unit in Gujarat! While CPSEs like BEML and RINL have created vast employment opportunities and promoted self-reliance, the PLI scheme is an open-ended one without any requirement of the beneficiary companies generating employment and net domestic value addition“
It is ironic that the Centre should subsidise profit-earning private companies in the name of “incentivising” them to manufacture but deny RINL of financial relief that is crucial for its revival.
I understand that RINL has become saddled with debt of the order of Rs 23,000 crores and, as a result, has not been able to pay overdue suppliers’ bills to the extent of Rs 9,000 crores, dues of more than Rs 2,400 crores to its employees and contribution to employees’ provident fund and other statutory dues.
We feel disturbed to find that RINL, left with few options, has even been forced to adopt a cut-back on payment of salaries to its employees, a situation that speaks volumes of indifference and lack of sensitivity on the part of the Centre.
It is unfortunate that the Centre should choose to allow RINL deliberately to reach such a vulnerable position, despite the mandate of the National Steel Policy that the Centre will nurture steel CPSEs into a leadership role.
RINL came into being as a result of an intense public agitation more than half a century ago and the Centre has hurt the sentiments of the people of north Andhra Pradesh by unilaterally deciding to privatise it. We feel that the step taken by the Centre is against the national interest.
May I appeal to you to intervene and convince the Union Cabinet to take the following steps urgently?
- Extend immediate financial relief to RINL to settle outstanding dues to its vendors
- Extend adequate financial assistance to enable RINL to settle outstanding statutory dues and pay dues to employees
- Advise financial institutions to undertake a debt restructuring arrangement with RINL (In the past, PSU banks provided such a facility to several private companies)
- Consider options to revive RINL fully, including through a merger with SAIL
Another aspect that causes worry from the national interest point of view is that high-quality iron ore is being exported to China, while we are becoming more and more dependent on import of finished steel products from that country. This calls for an urgent review.
I am sure that under your stewardship, steel CPSEs will become strengthened to become global leaders.
Regards,
Yours sincerely,
EA S Sarma
Former Secretary to the Government of India
Visakhapatnam
