An exit policy is important in this context because the G V Ramakrishna committee has strongly recommended preceding some public sector sell-offs with comprehensive downsizing. Nothing highlights the lack of initiative on the exit policy better than the performance of the National Renewal Fund. This much-feted fund was set up, with $500 million World Bank assistance, ostensibly to provide a human face to economic reform. It was intended to be a social safety mechanism for workers after the new industrial policy .
Five years into its operation, the NRF has been reduced to little more than a fund for public sector voluntary retirement schemes. Even in this limited capacity, the NRF has hardly made a dent. A 1996 ILO study reports that it covered less than 2 per cent of all redundant employees. It is unlikely that this position has changed now given that budgetary allocations to the fund have dropped sharply.
Admittedly, VRS was an NRF objective but only one of three. The others involved retraining and redeploying workers in units that were upgraded and modernised and eventually extending the scheme to the private sector. Of these, the issue of reskilling workers has been a non-starter partly because no public sector unit has actually reorganised its workforce so radically. The idea of including private sector participation was put on hold right at the start because of the complications this could create in administering the fund. In this, at least, policy-makers can be complimented for their foresight. Today, one of the biggest reasons for the failure of the fund has been the fact that there were no clear-cut guidelines on how the funds would be disbursed or used, and the mandatory Empowered Authority that was set up to recommend and monitor the fund was frequently bypassed by ministries in favour of direct requests to North Block. As importantly, the NRF overlooks the case of labour in the unorganised sector, which accounts for almost 80 per cent of the total labour force. This omission makes a mockery of the basic objective of the fund, especially since the private sectors inclination to hire and lay off casual labour at will has been well documented.
There is no denying that designing the NRF and an exit policy is a complex affair, especially since the government has few international models to draw on. But as a starting point, one remedy would be for the government to widen the ambit of the fund to include the private sector and levy a small surcharge on corporations to contribute as it has done with an import surcharge to finance infrastructure. Private sector participation could then be extended to partially administering the fund. Corporations may baulk at another payout but as a starting point for more radical change in labour policies, an extended but the restructured NRF could be useful.
