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Public assets or perpetual burdens?
Written By murali772 - 20 November, 2013
Media Reports Economy Public Sector regulation India outsourcing, privatisation
Babus and public sector executives may have to surrender phones and broadband connections from private operators such as Airtel and Vodafone and shift to the networks of state-owned MTNL and BSNL as part of the government's plan to improve the finances of the two PSUs.
The proposal envisages shifting the entire telephone expenses paid by the central government — mobile phone, landline, broadband and enterprise bills — to the state-run telcos and give exclusive rights to them. A similar model is followed for ailing Air India, which continues to bleed despite government officers, PSU executives and those working for autonomous bodies funded by the Centre flying the national carrier. "They may be making losses, but MTNL and BSNL are public assets. We are working on this proposal as part of measures to support their revival," said a government official, defending the plan.
MTNL, which operates in Delhi and Mumbai, has been accumulating losses since 2008-09. In 2012-13, the company registered a loss of over Rs 5,300 crore on annual revenue of a little under Rs 3,500 crore. The losses for BSNL, as per unaudited results, were close to Rs 8,200 crore in 2012-13, compared to around Rs 8,850 crore in 2011-12. BSNL has been in the red since 2009-10.
For the full report in the ToI, click here
I would say not only MTNL, BSNL, and Air-India should be wound up, but even infrastructure sectors like
a) public bus transport services (stage carriage services, using which differentiation the public sector monopoly has been perpetuated - check here for details),
b) power distribution (where Delhi has evolved a model over the past 9 years - check here for details),
c) water supply (where again Delhi is working on new models - check here for details),
where there is a near monopoly situation currently, should also be opened up to the private sector, and, resulting out of it, if the public sector players can't cope up with the competition, they should also be phased out/ wound up. The public sector players have shown themselves incapable of building capacity, particularly in monopoly situations, leading to these key sectors languishing and becoming stumbling blocks in the growth paths of the rest of the economy too.
The government's role should largely be confined to being the facilitator, and regulator (and controller, where essential). When they become players in addition, their regulatory role gets badly compromised, as we have been seeing repeatedly, and the game gets totally distorted, leading thereof to its ill effects on the economy.
Simultaneously, even the governments need to reduce their size - check this. I fully support NaMo's slogan "less government; more governance" in this regard.
Muralidhar Rao
COMMENTS
murali772 - 21 November, 2013 - 13:47
http://praja.in/hi/blog/murali772/2013/11/20/grab-opportunity-offload-air-india
murali772 - 25 November, 2013 - 18:09
Prime Minister Manmohan Singh on Thursday said greater functional autonomy and independence from bureaucratic control will help public sector enterprises become more competitive. Speaking at the BRICS (Brazil, Russia, India, China and South Africa) Competition Conference here, the Prime Minister said that state owned units have enjoyed captive markets and have been, over the years, shielded from competition. “Going forward, our governments will have to increasingly adopt competition-neutral policies. Competitive neutrality requires that the government not use its legislative and fiscal powers to give undue advantage to its own businesses over the private sector,” he said during the conference themed ‘Competition enforcement in BRICS countries: Issues and Challenges. Emphasising on greater functional autonomy, he reportedly said that such companies should become increasingly competitive and not shy away from competition from other players. He conceded, “unfortunately, government ownership inevitably brings with it a bureaucratic style of decision-making and the end result is that the enterprise cannot compete in a market populated by equals.”
For the full report in the New Indian Express, click here.
This is the statement by the Prime Minister of the very same government, the spokesman of which talked about imposing BSNl/ MTNL on babu's, in addition to Air-India, in just the past week. Can there be a bigger irony?
Apparently, there can be bigger ironies, since even as the above article talked of "greater functional autonomy" for PSU's, the following excerpts from an article in ToI (for the full report, click here), shows how the ministers in-charge are playing favorites, undemining the whole idea of autonomy:
Heavy industries minister Praful Patel and oil minister M Veerappa Moily have sought a year's extension beyond retirement for chief executives of two of India's largest enterprises under their wings — power equipment-maker Bhel and explorer ONGC, respectively. - - -The recommendations come at a time when the top management in Bhel and the public sector oil industry is going through succession process—from CEO to directors. The importance of the two companies can be judged from the fact that they account for procurement of material, services and equipment worth over Rs 55,000 crore a year. The Prime Minister's Office (PMO) has so far been steadfast in opposing the idea of granting extension beyond superannuation, both through UPA-1 and UPA-2. But the pressure from two powerful ministers in the Cabinet may sway the PMO's resolve and create precedence. If that happens, it would open floodgates for similar requests from other ministries and set off lobbying by chiefs of all PSUs.
Very clearly, autonomy for PSU's is a myth - they just can't be insulated from government interference. And consequently, the need for the government to disinvest from them.
murali772 - 23 December, 2013 - 12:03
Consider the magnitude of decay. Just in one segment—heavy industry—17 of the 32 Central public sector units have wiped out their net worth. The horror story of PSUs of course is in flashback, dated for the financial year 2011-12—the government is yet waiting for 2012-13 financials. In a country where every second subscribers are logging on to mobile networks, in a country where connectivity is yet an opportunity, MTNL and BSNL have between them notched losses of `26,580 crore in the last three years. These are no ordinary public sector units. MTNL is on the Navaratna list and BSNL is on the Miniratna list. And they are by no means the only “ratnas” on the list of lossmaking units. There is Shipping Corporation of India, the undeclared “ratna” called Air India which accounted for 27 per cent of PSU losses for the year 2011-12 and many other members of the 70 ratnas listed by the department of public enterprises.
The issue is not just about losses. Losses are not unknown or unusual in India’s public sector, given the socialist mythology of not-for-profit or not-only-for-profit mantra that they chant. The question is: Is the government true to the covenant of nurturing PSUs? Take drug-maker IDPL. It was declared sick in August 1992 and sent to BIFR (Board for Industrial and Financial Reconstruction). In 2013, it transpires that IDPL has received no package yet—not in the Xth plan, not in the XIth plan nor in the XIIth plan. And IDPL is not the only sick unit trapped in this black hole between life and death.
For the full text of the column by Mr Sankar Ayyar, in the New Indian Express, click here. The party that incorporates privatisation/ closure ( where there are no takers) of these perpetual burdens in its manifesto for the coming Parliamentary elections, surely gets my vote.
high time PSUs' roles are reviewed
murali772 - 16 April, 2015 - 14:02
Perils of government continuing as a service provider
murali772 - 15 August, 2015 - 11:43
An aircraft with a landing gear that had malfunctioned repeatedly, a weather radar that conks off mid-air and an airconditioning that does not work properly takes to the skies every day from Chennai. No, this is not a fitness sortie of a vintage plane, but a daily Air India flight (AI 263) that ferries passengers on the Chennai-Bengaluru-Thiruvananthapuram-Male sector.
Although most airlines have discontinued this version of A320s and moved to newer builds, Air India flies this 26-year-old aircraft, which had three tyre bursts in the last one year. The plane causes regular delays resulting out of technical snags. Consequently, patronage of the Air India service along this popular route has also taken a hit.
As per the norms set by Airbus, the plane's manufacturer, an aircraft has to be either grounded or retrofitted after 60,000 flight hours or 25 years. Airlines often do not keep a plane for such a long time because of escalating maintenance cost. The average age of an aircraft used by airlines is less than seven years. Air India pilots say there are nine such A320 aircraft in service, but this could not be verified.
- - - Sources said pilots struggle mid-air as the plane's weather radar, which detects turbulence during monsoon, often malfunctions. The radar is crucial as during the rainy season in Kerala the aircraft has to fly in bad weather conditions on its way to Male.
For the full text of this report in the ToI, click here
And, below are the excerpts from another ToI report, just a few weeks back (for the full text, click here)
Air India's chief of flight safety was removed from his position on Friday for failing to keep flight data of all flights for a period of six months. The directorate general of civil aviation (DGCA), which approves the flight safety chiefs of all airlines, withdrew its approval for the AI official to occupy the position that was given this January.
The DGCA had sought data for all AI flights to Leh between May 23 and June 25 and its Bengaluru-Hyderabad flight (AI 513) of June 28. A passenger had complained about AI 513 having a hard touch down in Hyderabad and then taking off again. The airline reportedly did not give data for these flights due to which the regulator could not probe them.
"We had issued a show cause to AI flight safety chief, A S Soman, for failing to maintain 100% flight data records of all flights for a period of six months, as is required by the regulator. Soman in his reply blamed engineering for not keeping the data. We found his reply not satisfactory," a senior DGCA official said. Soman will, however, continue to remain in AI and has only been removed from the post for chief of flight safety.
- - - Flight data has to be kept for a period of six months so that airlines can analyze them to find how well their pilots are flying aircraft. Also, in case of a mishap the data becomes a critical tool to examine what may have gone wrong and lead to suggestions for safer flying in future.
Mr Soman will go onto the next posting. There's no sacking him ever, whether he performs there or not, too (Isn't that essentially why everyone hankers after a government job? - check here for more on that). The same goes for Mr Soman's successor too as "Chief of Flight Safety". Talk of safety is essentially a joke.
I have from long stopped patronising AI, even the odd times when they offer the cheapest fares.
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