The Bharatiya Mazdoor Sangh (BMS), a prominent central trade union, has delivered a stern ultimatum to the Indian government, demanding the resolution of long-standing pay-related issues affecting employees of Bharat Sanchar Nigam Limited (BSNL) within a two-month timeframe. Failure to meet these demands, articulated in a letter dated October 23, 2026, to Union Communications Minister Jyotiraditya Scindia, could trigger a nationwide agitation under the BMS banner, potentially disrupting operations and further complicating the ongoing revival efforts of the state-owned telecom giant. The union’s demands primarily revolve around the implementation of the Third Pay Revision Committee (PRC) recommendations and the settlement of outstanding issues from the Second PRC, underscoring a deep-seated frustration among BSNL’s workforce regarding stagnant remuneration and career progression.
Deep Dive into the Union’s Demands
The comprehensive set of demands put forth by the BMS, representing a significant portion of BSNL’s employees through its affiliated organisations like the All India Graduate Engineers & Telecom Officers Association (AIGETOA) and the Bharatiya Telecom Employees Union (BTEU), highlights critical areas of contention that have festered for years.
For the Third Pay Revision Committee (PRC), the central sticking point is the "affordability clause." BMS has unequivocally called for a time-bound decision on granting BSNL a waiver from this clause. The affordability clause, typically applied to loss-making Public Sector Undertakings (PSUs), dictates that pay revisions can only be implemented if the company demonstrates its financial capacity to bear the additional expenditure. Given BSNL’s protracted financial struggles, this clause has effectively stalled any meaningful pay revision for its employees, even as other profitable PSUs have moved forward. The union argues that a waiver is not just necessary for facilitating a fair pay revision for BSNL employees but is also crucial for resolving the long-pending pension revision issue, which equally affects employees of Mahanagar Telephone Nigam Limited (MTNL), BSNL’s sister PSU. Furthermore, the BMS is pressing for the extension of the initial basic pay scale of Rs 35,400 to BSNL-recruited junior engineers (JEs), a move aimed at ensuring equitable compensation and career entry points for new recruits.
Beyond the immediate concerns of the Third PRC, the BMS has also demanded the urgent settlement of outstanding issues stemming from the Second Pay Revision Committee (PRC). These include the implementation of standard E2 pay scales for junior telecom officers (JTOs) and junior accounts officers (JAOs), and E3 scales for senior deputy engineers (SDEs) and accounts officers (AOs). These pay scale revisions are vital for career progression and ensuring that officers receive remuneration commensurate with their responsibilities and market standards. Another critical demand is the full 30 per cent contribution towards superannuation benefits for BSNL recruits. Superannuation benefits are a cornerstone of post-retirement financial security, and a full contribution is seen as a fundamental right and a necessary component of a comprehensive compensation package, particularly for employees who have dedicated their careers to public service.
A Chronology of Discontent and BSNL’s Tumultuous Journey
The current ultimatum by the BMS is not an isolated event but rather the latest chapter in a long and often contentious history between BSNL employees, their unions, and the government. To understand the gravity of the situation, it’s essential to trace the trajectory of BSNL and the evolution of pay revision mechanisms within Indian PSUs.
BSNL was established in 2000, succeeding the Department of Telecom Services (DTS) and Department of Telecom Operations (DTO). For years, it held a dominant position in the Indian telecom sector, benefiting from a vast infrastructure and a captive market. Its employees, largely drawn from government services, enjoyed security and benefits akin to central government employees. However, the advent of private telecom operators in the early 2000s, coupled with rapid technological advancements and aggressive tariff wars, began to erode BSNL’s market share and profitability.
The Pay Revision Committees (PRCs) are institutional mechanisms established by the Department of Public Enterprises (DPE) under the Ministry of Heavy Industries and Public Enterprises to recommend salary and allowance revisions for employees of Central Public Sector Enterprises (CPSEs). Typically, these revisions occur every ten years, following the recommendations of the Central Pay Commissions for government employees. The First PRC recommendations were implemented relatively smoothly. The Second PRC, which became effective from January 1, 2007, introduced the affordability clause, which has since become a major hurdle for financially struggling PSUs like BSNL and MTNL. While most other PSUs implemented the Second PRC recommendations, BSNL and MTNL faced significant delays and partial implementation due to their deteriorating financial health.
The period from 2010 onwards saw a steep decline in BSNL’s fortunes. Intense competition from private players, particularly after the entry of Reliance Jio in 2016 with its disruptive pricing, severely impacted BSNL’s subscriber base and revenue. The delay in launching 4G services, largely attributed to bureaucratic hurdles and procurement issues, further hampered its ability to compete effectively.
Recognizing the strategic importance of a state-owned telecom operator, the government launched two significant revival packages for BSNL and MTNL. The first package, announced in October 2019, amounted to nearly Rs 70,000 crore and included measures such as a voluntary retirement scheme (VRS), administrative allotment of 4G spectrum, debt restructuring, and monetisation of assets. The VRS, while successful in reducing the employee headcount by nearly 50% (from approximately 1.76 lakh to around 70,000), also led to a significant loss of experienced personnel and impacted employee morale among those who remained. A second, even larger revival package of Rs 1.64 lakh crore was approved in July 2022, focusing on capital infusion for 4G/5G services, rural wireline expansion, and financial viability. These packages, while crucial for BSNL’s survival, have not directly addressed the core pay revision issues, leading to the current impasse.
The Third PRC recommendations became effective for most other PSUs from January 1, 2017. However, BSNL employees continue to await its implementation, primarily due to the unresolved affordability clause. This prolonged delay, spanning almost a decade for the Third PRC and even longer for certain aspects of the Second PRC, has created a sense of injustice and demoralisation among the workforce. Union protests, hunger strikes, and demonstrations have been periodic, but this latest ultimatum signals a potential escalation to a nationwide scale.
The Affordability Clause: A Gordian Knot
The affordability clause, a key determinant for pay revisions in loss-making PSUs, is the central antagonist in this narrative. The Department of Public Enterprises (DPE) guidelines stipulate that pay revisions for executives and non-unionised supervisors in CPSEs can only be implemented if the enterprise has made a profit in the immediate three preceding financial years, or if it has the financial capacity to absorb the impact of the revision without government budgetary support. For BSNL, which has reported continuous losses for over a decade, meeting this criterion through internal accruals has been impossible.
Unions argue that applying this clause rigidly to BSNL is unfair and counterproductive. They contend that BSNL’s losses are not solely due to operational inefficiencies but also due to legacy issues, government policy decisions (such as delays in spectrum allocation, universal service obligations, and restrictions on procurement), and intense market competition. Furthermore, they argue that a demoralised workforce, struggling with stagnant wages and career progression, cannot be expected to contribute effectively to the company’s revival. Granting a waiver, they believe, would acknowledge the unique circumstances of BSNL and demonstrate the government’s commitment to its employees, which in turn could boost morale and productivity, ultimately aiding the revival process. The pension revision issue, affecting both BSNL and MTNL retirees, is also intrinsically linked, as pension benefits are typically calculated based on the latest pay scales. The delay in pay revision thus directly impacts the livelihoods of thousands of pensioners.
Impact on Employees: Morale, Livelihoods, and Future Prospects
The protracted delay in pay revisions has had a profound impact on BSNL employees. Stagnant salaries mean a continuous erosion of purchasing power, especially in an inflationary economy. This directly affects the quality of life for employees and their families. The lack of career progression, due to non-implementation of standard pay scales like E2 for JTOs/JAOs and E3 for SDEs/AOs, creates a bottleneck in the organisational hierarchy, leading to frustration and a perception of unfairness.
The demand for a full 30 per cent contribution towards superannuation benefits for BSNL recruits is also crucial for long-term financial security. In an era where defined benefit pension schemes are being replaced by defined contribution schemes, ensuring adequate employer contribution is vital for employees to build a substantial retirement corpus. The current situation leaves many BSNL recruits feeling disadvantaged compared to their counterparts in other PSUs or the private sector.
Low morale among employees is a significant impediment to BSNL’s revival. A workforce that feels undervalued and unfairly treated is less likely to be engaged, innovative, and productive. This directly impacts customer service, network maintenance, and the rollout of new services like 4G, which are critical for BSNL to regain market share.
BSNL’s Financial Health and the Government’s Balancing Act
Despite the significant government revival packages, BSNL’s financial turnaround remains a work in progress. While the 2019 VRS helped reduce salary costs, the company continues to face challenges. As of recent reports (inferred for 2026), BSNL’s subscriber base, though stabilising, remains a fraction of private players. Its 4G rollout, while finally gaining momentum, is still playing catch-up. The government’s investment in BSNL is substantial, aiming to make it a viable entity, especially for strategic reasons like rural connectivity and disaster management.
The government faces a delicate balancing act. On one hand, there is a commitment to public sector welfare and ensuring fair remuneration for employees. On the other, there is the imperative of fiscal prudence and ensuring that public money is spent judiciously, especially in a loss-making entity. Granting a blanket waiver for the affordability clause, while addressing employee demands, would set a precedent and potentially open the floodgates for similar demands from other struggling PSUs. However, the unique circumstances of BSNL, its strategic importance, and the historical delays in its modernisation and spectrum allocation, provide a strong case for special consideration.
Industry analysts, while sympathetic to the employees’ plight, often point to the broader challenges of reforming state-owned enterprises. They suggest that while pay revisions are necessary, they must be part of a larger, sustainable business model. The long-term viability of BSNL depends not just on government largesse but also on its ability to compete effectively, improve operational efficiencies, and innovate. However, a highly demotivated workforce makes achieving these goals significantly harder.
Implications of Potential Nationwide Agitation
The BMS warning of a nationwide agitation carries serious implications for BSNL, its customers, and the government.
- Operational Disruptions: A large-scale strike could lead to widespread disruption of BSNL’s services, including mobile, broadband, and landline services. This would severely inconvenience millions of customers, including those in remote and rural areas where BSNL often remains the primary service provider. Critical government communication networks, which rely on BSNL infrastructure, could also be affected.
- Setback for BSNL’s Revival: Any industrial action would severely impede BSNL’s nascent revival efforts, particularly the ongoing 4G rollout. Delays in network expansion, maintenance, and customer acquisition would further erode confidence in the company and make it harder to compete against agile private players.
- Economic Impact: While the direct economic impact might be limited to BSNL, prolonged unrest could damage investor confidence in the broader PSU sector and create an impression of instability.
- Political Ramifications: The government, particularly the Ministry of Communications, would face significant political pressure to resolve the crisis quickly. A nationwide agitation involving a major public sector undertaking could become a significant political liability, especially in the lead-up to any upcoming elections.
- Damage to Public Trust: Disruptions to essential services can significantly damage public trust in BSNL and, by extension, in the government’s ability to manage its public sector enterprises effectively.
The Path Forward: Dialogue and Urgent Resolution
The two-month deadline set by the BMS means that the government has until late December 2026 or early January 2027 to address these critical issues. Given the urgency, a proactive and constructive dialogue between the Ministry of Communications, the Department of Public Enterprises, BSNL management, and the employee unions is imperative.
Potential solutions could include:
- Conditional Waiver: The government could consider a conditional waiver for the affordability clause for BSNL, perhaps linked to specific performance targets or a phased implementation of pay revisions.
- Financial Support for Pay Revision: Direct budgetary support for a limited period to cover the additional expenditure arising from pay revisions could be considered, framed as an investment in employee morale and BSNL’s strategic importance.
- Formation of a High-Level Committee: A high-level committee could be formed to fast-track the resolution of both Third PRC demands and outstanding Second PRC issues, with a mandate to submit recommendations within the two-month timeframe.
- Clear Communication Strategy: The government needs to communicate transparently with the employees about the challenges and the proposed solutions, restoring trust and confidence.
The BMS ultimatum serves as a stark reminder that while financial restructuring and technological upgrades are vital for BSNL’s survival, the human element – the morale, welfare, and fair treatment of its dedicated workforce – is equally crucial. Failure to address these long-pending demands risks plunging BSNL into another period of industrial strife, potentially undoing the considerable efforts and investments made towards its revival. The coming weeks will be critical in determining whether a mutually acceptable solution can be found, or if BSNL is destined for another challenging confrontation.
