New Delhi: Former Union Secretary E.A.S. Sarma has accused the Union and Andhra Pradesh governments of systematically dismantling the Visakhapatnam Steel Plant (RINL), a public-sector enterprise.

In an August 18 letter to Union steel minister H.D. Kumaraswamy, Sarma claimed that transferring 18,000 acres of its valuable assets to private companies, among other things, has weakened the plant. He also pointed to a proposed ArcelorMittal project, warning this could become "one of the biggest financial scams of this decade."

Sarma’s letter sharply escalates the controversy around the troubled steel plant. The letter has also raised questions on the assurances Kumaraswamy offered earlier this year. A Press Information Bureau release in January reported that the minister pledged a Rs 11,440 crore-revival package, vowing to make RINL a key player in attaining India’s goal of 300 million tons of steel production.

Sarma's letter throws light on recent events like aggressive staff reductions, political lobbying for a rival private steel plant and, what he calls, a deliberate denial of essential resources to RINL.

In his letter, Sarma detailed specific actions that have affected the state-owned steelmaker. The process began when the government refused RINL a captive iron ore mine, a move that "dealt a death blow to the finances of RINL," while private companies received such allocations, the letter states. The letter further claims the Ministry has deliberately weakened management by leaving senior positions vacant for long periods and choked operations by not providing logistical support for critical inputs like coke.

Sarma’s argument centred on the push to reduce RINL’s workforce. He claimed the ministry "forced VRS on thousands of its employees to disempower its highly competent workforce." The Hindu reported on June 20 that RINL issued its second Voluntary Retirement Scheme (VRS), open to employees over 45 with at least 15 years of service. This follows a steep decline: the regular workforce shrank from about 17,000 in 2020-21 to 12,116 by March 2025. It is projected to drop to 10,267 by August 2025 – a total cut of 1,849 staff, including 1,100 from the first VRS.

Also read: Vizag Steel Plant: Modi's Rs 11,440-Crore Package Raises More Questions Than Answers

The report cited an official saying that at least 700 employees, some rejected from the first VRS, applied for the second. This also includes natural attrition, with 50 to 100 employees retiring each month; 92 will retire in August 2025, and another 764 by June 2026.

While RINL weakens, Sarma pointed to enthusiastic government support for private rivals. He cited reports about 1,300 acres of land allocated to Jindal Steel. He also referenced an August 7  report from the Hindu detailing a meeting where Telugu Desam Party (TDP) MPs pressed Kumaraswamy to fast-track approvals for a new 3,800 acre ArcelorMittal-Nippon Steel plant near Anakapalli.

Sarma warned about ArcelorMittal’s global record, citing its situation in South Africa. An Economic Times report noted the company, after a Rs 500 million loss in six months, threatened to close its long steel business, affecting over 3,500 jobs, while awaiting a government rescue. Sarma highlighted that the South African government, reportedly unable to resist pressure, proposed a $92 million concession. He wrote, "Should such an eventuality occur... it is the people of Andhra Pradesh that would be forced to bear the burden."

Sarma also raised serious financial concerns. He condemned the state government’s policy of co-investing public funds. He objected to the state bearing a 50% share in the private ventures, noting a public contribution of Rs 8,175 crore to Jindal Steel's RS 16,350 crore investment and Rs 27,982 crore to ArcelorMittal’s Rs 55,964 crore project – a total public outlay of Rs 36,157 crore. He labeled the potential privatisation of RINL's assets as a transfer at an "unconscionably low price," warning it would "undoubtedly attract the provisions of the Prevention of Corruption Act."

He heavily emphasised the socio-economic impact of privatising the plant. Such a move, Sarma argued, would reduce local employment and, critically, "permanently close the doors for reservations for SCs/STs/OBCs," which he described as deliberate disempowerment of disadvantaged communities.

The former secretary concluded by reminding Kumaraswamy of his January promise. Quoting the official press release, Sarma recalled the minister’s words: "'Strength is within you and with your hard work, I would like to bring this plant (RINL) to number one position in the country'said Sri HD Kumaraswamy amidst thunderous applause.”

Contrasting this with his subsequent actions, Sarma stated, "What your ministry has done since then and what the TDP-Jana Sena combine is presently doing, are totally in contradiction with the words spoken by you at that time!" He made a final appeal to the minister to honour his assurance and stop the "highly people-unfriendly moves" to dismantle the historic steel plant.

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