NEW DELHI, June 2 — The decision of the Communications Minister, Mr Ram Vilas Paswan, to give free telephone facility to its employees has got enmeshed in controversy even as government and powerful unions lock horns over its financial implications.

Informed sources said the Prime Minister’s Office did not appreciate the move on the part of Mr Paswan to distribute largesse at the cost of the public exchequer at a time when there was a conscious attempt to move away even from the subsidy-regime.

Earlier, this week Mr Paswan announced that from June 1, 3.2 lakh employees would benefit from his decision to give concession and rent free telephone which includes no registration, rental or installation charges and 150 bi-monthly free calls.

The announcement according to estimates in the department could lead to Rs 1,200 crore loss of revenue, a claim which is contested by staff federations who say that matching revenue savings have been ensured to meet the cost.

The Federation of National Telecom Unions, recognised by the government, has defended the move and contended that the actual burden would be around Rs 36 crore and not Rs 1,200 crore as estimated by the department officers.

Confusing the scenario, sources in the government said the announcement of the minister which was issued through an official release was yet to cleared by the Finance Ministry.

“The decision which involves financial implications has to be cleared by the Finance Ministry’’, a senior government official said, adding that it need not be taken to the Cabinet for approval.

The decision has been criticised by the Congress, the principal opposition party in Parliament, which has said that while on one hand the Centre was not willing for a cut in subsidies worth Rs 900 crore it was frittering away Rs 1200 crore through such populist measures.

Interestingly, in a two-page note circulated today the unions said the “criticism was unfounded’’ and claimed that Mr Paswan had not only earned the goodwill of the employees but “set right the irrational decision’’ of Mrs Sushma Swaraj to sanction telephone facilities for retired officials which was rent-free.

It was claimed the facility given by the previous Communications Minister would continue to be available to staff even after December when the Department of Telecom Services will be corporatised.

The note said even on May 27 Mr Paswan had persuaded the Federations to give up part of their claim for bonus to balance the cost on providing the facility (free telephone).

As per the bonus formula, 75 days bonus was due to the employees for 1998-99 but only 71 days ad hoc bonus was paid. The government’s efforts to change the formula with a view to reducing the quantum of bonus was not acceptable.

Under the old formula the limit was 73 days, therefore the acceptance of 70-day bonus by the three federations for 1999-2000 till corporatisation and forgoing two days bonus for 1998-99 has saved Rs 28 crore expenditure.