Tag:GS-3| Economy|| Infrastructure|| Communication

 What is the issue?

• BSNL and MTNL, the state-owned telecommunications firms, are under considerable financial pressure.
• In this context, here is a look at the causes and the possible measures out.

Status of the two firms

• In the last Union budget, only Rs 100 crore was allocated as direct budget support to these two major firms.
• But by means of internal and extra-budgetary capital, they are supposed to rise over Rs 15,000 crore.
• g. BSNL lost nearly Rs 14,000 crore in 2018-19, bringing its total losses to over Rs 90,000 crore.
• The company has nearly 170,000 workers whose salaries consume 77% of its revenue.
• Both BSNL and MTNL have long been a drain on the public exchequer and on the state’s borrowing capacity.

Causes

• Government Policy Decisions: Many factors can be blamed for this situation, including government policy decisions of the past.
• The entry of Jio: The entry of Reliance Jio has, in addition, made things difficult for all legacy players.
• Structural changes: The decline of the public-sector telecom majors is due to structural changes in the business itself.
• Service-based business
  • The telecom sector is increasingly a service-based business.
  • This means that private-sector companies have an inherent advantage over even public-sector ones with the softest of budget constraints.
• Given all, there is little reason to imagine retaining BSNL or MTNL in their current state.

Is revival a feasible option?

• The departmental bureaucrats of the companies and their associate Union argued that reviving them is cheaper than shutting them down.
• In the case of BSNL, it would cost Rs 95,000 to get the 170,000 workers off the payroll through voluntary pension schemes and the like.
• A recovery kit, on the other hand, will cost less.
• It is also claimed, however, that not all employees in the public sector should be treated in the same way.
• Some may be re-absorbed in other public-sector undertakings or the government, which in many key areas

 lacks manpower.

• Also, many others would be close to retirement anyway.
• On the other hand, the revival project is not very realistic as losses beginning  2 years from now would be sharply narrow.

• BSNL would, therefore, be in worse condition by

Way ahead

• As with Indian PSUs, due importance must be attached to the extensive network infrastructure that has been created.
• This is to be seen in contrast to the tarnished brand name and employee roll pressure.
• It is certainly not possible to neglect the infrastructure.
• For example, the Bharat Fiber network covers more than 800,000 km
• More than Vodafone-Idea, Bharti Airtel and Jio put together.
• At this stage, it is worryingly under-used and undervalued.
• Significant national savings would be required to ensure that private-sector investment does not replicate this network.
• Thus, the emphasis on the PSU telecom majors must be on how their assets can be sold.
• This is to ensure higher productivity, and see how their manpower can be absorbed elsewhere where necessary.

References

• https://www.indiatoday.in/technology/features/story/bsnl-may-shut-down-it-has-no-money-to-pay-employees-all-you-need-to-know-about-bsnl-crisis-1556217-2019-06-26
• https://www.business-standard.com/article/technology/mtnl-bsnl-face-crisis-over-staff-105101101092_1.html