Reviving the BSNL?

First, let us be familiar with a few great thoughts of wise men about the public sector. “Government in business means the ruination of people, and if the Governments (or Public Sector companies) are rich, the people will be poor.”

“The public sector is devoid of the living spring out of which flows human energy, and human enthusiasm and human vigilance. Laziness, indifference and barren dullness are the unmistakable and well-known marks of the public sector. We must reduce this necessary evil, the so-called public sector, to the minimum and not let it encroach and spread over fields where the private citizen’s own interest can be well and safely yoked to the public interest. Wherever this has been done we have remarkable success in spite of every handicap that has been needlessly put in the way by a Government that has fanatically adopted a wrong dogma. — C Rajagopalachari, Swarajya, June 10, 1961, Public sector Undertakings

“Academicians have attributed several traditional strengths to the public sector. They primarily are:

• Ability to survive without profit
• State ownership gives than immortality
• Wages and high bonuses can bepaid over by continuously incurring losses
• Government ownership gives full benefit of a monopoly.”

—Vasant Sathe, Restructuring of Public Sector in India

“The sleeping sickness of socialism is now universally acknowledged—but not officially in India….. The public sector enterprises are the black holes, the money guzzlers and they have been extracting an exorbitant price for India’s doctrinaire socialism.”

“The important thing for government is not to do things which individuals are doing already and do them a little better or a little worse, but to do those things which are not done at all.”—Lord Keynes

“If India cannot have adequate and inexpensive bandwidth, it can forget about becoming an IT & Software Superpower, ever.”

—Nicholas Negroponte, Director, Media Laboratory, MIT, USA

“I believe that some of the best economic progress of the last ten years is attributable to the programme of privatisation with the introduction of competition and independent regulation.”

—Sir Bryan Carsberg, former Director General, OFTEL, UK

The reasons for turning to telecom privatisation and liberalisation are remarkably consistent across countries. At the heart of the common ground is the dawning realisation that telecommunications is not a luxury, but an important provider of income, employment, and services that plays a central role in determining the competitiveness of nations. Moreover, even affluent countries are now finding that the immense financial commitment of developing world-class telecommunications infrastructures is difficult to conceive without private-sector capital.

“Many of those who stood on the sidelines awaiting the jury’s verdict on telecom privatisation are hesitating no longer. Experience to date indicates that if it is conducted with a thoughtful vision for the sector, a detailed transition programme, and a robust regulatory scheme, it can raise service levels, accelerate development, stimulate the economy, and ultimately reinforce the competitiveness of both the sector and the entire country. As a result, the rising current of telecom privatization and liberalization around the globe is becoming a tidal wave. Getting it right is worth the effort.”

—Scott Beardsley, Michael Patsales Fox in the Mc Kinsey Quarterly 1995, Number 1

Why do we need loss-making Public Sector Companies: There are several private sector airlines, fiercely competing among themselves. Why should we keep afloat a consistently loss-making market share losing Air India? Does it serve the poor? Are poor or well-to-do travelling by air; do we need BSNL & MTNL, loss-making and market-share losing normally subscriber-non-caring BSNL and MTNL when we have hyper-competitive private Telcos (R-Jio, Bharati AirTel, Vodafone-Idea) who have brought telephones into every person’s palm, including the poor and even beggars (through among others, an innovation-Prepaid-by which you consume /spend what you can afford, ever so little it be!

Security of government communications: Does the USA, the world’s super-power, have a state-owned telco? No, never in the past nor now. 1984 did not see the “Orwellian” (George Orwell’s, nightmarish,” Big Brother is Watching ”super – states (Eurasia, Asia & Oceania) but saw the privatisation and demonopolisation of telecoms in the world’s leading nations-USA, UK, Japan…..

Indian Telecoms Unions, Marxists, Nehruvian “socialists” habitually but ineffectually opposed reforms in telecoms; reactionaries all. But PV Narasimha Rao and Atal Behari Vajpayee dexterously and resolutely broke up government monopoly in telecoms; fostered competition and facilitated private investment, new technologies and new services with the result we have:

The smartphone is replacing the TV set, the room size computer, tabletop, lap-top); put out the telegram, telex, Fax, post-card; visit to banks and libraries… and is about to reduce the hope.

In the on-rush of such communication wonders, a government company under leash by change-resisting, security-addicted, responsibility–shifting, risk-avoiding, accountable-free and minister-pleasing PSU-men and PSU cannot compete with private companies and survive. PSUs have to necessarily be subservient to the political master—the Minister and his party. Therefore wisdom dictates that the BSNL and MTNL must be privatised if there are buyers (eg: Videsh Sanchar Nigam Ltd, Hindustan Teleprinters Ltd) or continued to wither away (eg: Hindustan Cables, IDPL, HMT). In the latter case, a wise government should cut its losses.

Alternative #1:

• Break up BSNL into state-wide companies and sell which can be sold i.e for which buyers may come forward
• None may come to buy (as in the case of Jet Airways) some like those in the north-east and J&K. Run them as government department (Government of AP is government—departmentalising the perennially loss-making state Road Corporation).

Alternative #2:

• Let BSNL & MNTL wither away just as Air Cell, R-Com, Jet Airways etc. Their buildings and sites may be sold. They will fetch colossal amounts just as the textile-mill sites in Mumbai city. The amounts realised by the sale of assets may be used to compensate the employees for lose of their jobs.
• Irrespective of which alternative is chosen, it is prudent to revalue BSNL/MTNLs immovable assets-sites and buildings (and possibly, yet life-having, serviceable network equipment).

Finally, the Government would be doing great injustice to the tax paying people of India, if it succumbs to pressure of the trade unions or failed ideology of state-ownership, however unnecessary or undesirable it is to keep the bleeding and dying companies on artificial life support through debt-waivers, capital infusion, one-time grants, free allotment of spectrum, etc.