Bad ideas in India seldom die, despite promises of economic ‘transformation’. For example, the Cabinet will consider a proposal to revive loss-making telecom public sector units, BSNL and MTNL. The estimated cost of the revival package is a whopping Rs 74,000 crore. That the revival plan is an example of thoughtless spending is evident not just from the quantum but also from the details of the plan. It includes allotment of 4G spectrum worth Rs 20,000 crore. When the rest of the telecom industry is in the process of transitioning to 5G, a paradigm shift, scarce resources are to be spent on helping PSUs roll out a 4G network.
Also read: Government proposes Rs 74,000 crore bailout for BSNL, MTNL
Finance minister Nirmala Sitharaman will present her first budget on Friday in the backdrop of a slowdown in economic momentum. One of the consequences of the slowdown is that tax collections have been lackluster. Despite this constraint, the government has to step up its investment in infrastructure projects such as roads and railways. The best way to raise resources at this juncture is to monetise existing assets, including PSUs. What it should be implementing at this moment is aggressive disinvestment, not writing blank cheques to loss-making PSUs.
Within government, the case against the sale of MTNL and BSNL is that in the intensely competitive telecom industry, there are unlikely to be buyers today. Even if that were the case, it makes no sense to throw more money down the drain through meaningless revival packages. Instead, some of the assets of PSU telecom companies can be monetised to fund a VRS for the employees. With the Budget upon us, It’s time the government thought of spending taxpayer money more productively.