A relay sit-in protest by workers, backed by Left-affiliated trade unions such as the Centre of Indian Trade Unions (CITU), has been ongoing at the VSP for over 1,430 days, demanding the Centre withdraw its privatisation efforts or merge RINL with Steel Authority of India Limited (SAIL).
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As union leaders stepped up their attack, accusing Telugu Desam Party (TDP) chief and Andhra Pradesh Chief Minister Chandrababu Naidu and JanaSena Party (JSP) supremo Pawan Kalyan of mortgaging the state and workers’ interests to Modi for their vested benefits, the Centre’s announcement came as a significant relief for both parties.
Soon after Union Minister Ashwini Vaishnaw made public the decision of the Cabinet Committee on Economic Affairs (CCEA) Friday, Naidu took to X, calling the day “a historic moment etched in steel”.
Today marks a historic moment etched in steel. It is an emotional and proud moment for people of Andhra Pradesh, as the Union Government, in response to GoAP’s consistent efforts since the formation of NDA Government, has approved financial support of Rs. 11,440 crore to revive… pic.twitter.com/O3WxPUh7SU
— N Chandrababu Naidu (@ncbn) January 17, 2025
Naidu, whose TDP is the BJP’s biggest ally in the NDA, added that VSP “was not merely an election promise; it was a deeply personal commitment we were determined to honour”.
Naidu expressed his gratitude to Modi for his “unwavering support to the Steel Plant, which I assure, will contribute to the PM’s vision of nation-building as part of Viksit Bharat – Viksit Andhra.”
Political observers suggest the VSP package will now help Naidu showcase the funds he is managing to extract from the tight-fisted Modi government.
In the Union Budget 2024-25, presented in July after the new government formation, Sitharaman announced a Rs 15,000-crore “arrangement” for the Amaravati capital development project while committing to finance the early completion of the Polavaram Irrigation Project, a multipurpose national project on the Godavari river.
In a post on X, Modi wrote: “The Visakhapatnam Steel Plant holds a special place in the hearts and minds of the people of Andhra Pradesh. During yesterday’s Cabinet meeting, it was decided to provide equity support of over Rs 10,000 crore for the plant. This has been done, understanding the importance of the steel sector in building an Aatmanirbhar Bharat.”
During Modi’s visit last week, trade unions and plant employees, with no firm assurance from the Centre at the time, took out rallies and held protests demanding the PM clarify his stand.
On Friday, information and broadcasting minister Vaishnaw announced, “The PM approved a Rs 11,440 crore revival package. RINL will start full steel production with two blast furnaces in early 2025 and with three blast furnaces by August 2025.”
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‘Good days ahead for Andhra Pradesh!’
In his X post, CM Naidu described the VSP as more than just a factory. “It stands as a monument to the struggles and spirit of the people of Andhra Pradesh, holding a special place in the hearts of all, especially the people of Vizag.”
“Good days ahead for Andhra Pradesh! Visakha Ukku, Andhrula Hakku!” wrote Naidu.
The slogan in Telugu, meaning “Visakha steel is Andhra’s right,” defines the years-long struggle, including sacrifices Andhra people waged to achieve the plant.
VSP’s foundation was laid in 1977 by the then PM Indira Gandhi after a prolonged movement in the seventies, when people rallied with the popular war cry. The agitation reportedly claimed over 30 lives.
The plant was commissioned in 1992.
VSP, run by its corporate entity named Rashtriya Ispat Nigam Limited, is the first shore-based integrated steel plant in the country.
VSP employs about 15,000 permanent and 20,000 contract workers and provides indirect livelihood to over 65,000 people. The plant thus supports one lakh jobs and about five lakh people—about a quarter of Vizag city’s population, union leaders say.
However, the major drawback and a reason for losses reported at VSP over the years is the lack of captive iron ore mines, which are mines owned and operated by steel plants to produce iron ore for their own use.
In the absence of captive mines, employees say VSP is forced to buy ore from National Mineral Development Corporation (NMDC), escalating production costs. For years, unions have been agitating for the allocation of captive mines, which they claim will bring massive profits.
When in opposition, TDP accused the then-ruling Yuvajana Sramika Rythu Congress Party (YSRCP), with 28 MPs, of failing to protect VSP, “a representation of Telugu self-respect”.
In February 2021, TDP general secretary Nara Lokesh had also demanded the then chief minister Jagan Mohan Reddy to move a resolution in the state assembly to acquire the plant to be run under the state government, in case the Centre proceeded firmly with its plan.
The Modi 2.0 CCEA had, on 27 January 2021, given in-principle approval for 100 percent strategic disinvestment of the government of India’s shareholding in RINL along with management control through privatisation.
The privatisation moves, which union leaders allege were intended to hand over the massive plant to business conglomerates close to the regime, came around the time RINL posted a sales turnover of around Rs 18,000 crore in 2020-21, “the second highest since its inception”.
In March 2021, during the period overlapping with the protests, the steel PSU achieved a sales turnover of Rs 3,300 crore and a sales volume of 7,11,000 tonnes, “for the first time in the history of the company.”
“This is a whopping 42 percent more than the previous best of Rs 2,329 crore in March 2019,” PK Rath, chief managing director, RINL, said at the time.
VSP had also registered a net profit of about Rs 740 crore for the previous four months, according to an RINL release then.
The workers’ protest against privatisation received widespread support from the public and political parties in Andhra Pradesh. A statewide shutdown was also organised in solidarity on 5 March 2021.
However, days later, Sitharaman said in Parliament that the Centre would proceed with the 100 percent disinvestment of its share in the VSP by way of privatisation.
Nevertheless, the NDA 3.0 appears to have reevaluated its stance since the TDP-BJP-JSP alliance’s massive victory in the general and Andhra Pradesh assembly polls. Over the past few months, CM Naidu reportedly raised the VSP matter several times with the PM and concerned ministers.
The steel ministry statement said the “financial condition of RINL is critical”. As on 31 March 2024, the net worth of RINL was Rs (-) 4,538.00 crore, current assets were Rs 7,686.24 and current liabilities were Rs 26,114.92 crore.
“RINL has exhausted the sanctioned borrowing limits from banks for working capital and was not in a position to get further loans. RINL also defaulted on the Capex Loan repayments and Interest payments in June 2024,” the statement said.
The VSP spans 22,000 acres, with a production capacity of 7.3 million tonnes per annum (MTPA). It is a Navratna Public Sector Enterprise operating under the Ministry of Steel. Visakhapatnam is popularly known as the “steel city” because of the plant.
(Edited by Radifah Kabir)
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