A Force To Reckon With
By Sunil Batra
 

On October 1st, 2000, history was created in the Indian Telecom Sector, when the Department of Telecom Services (DTS) was corporatised and converted into India's largest Public Sector Undertaking - Bharat Sanchar Nigam Ltd (BSNL). It was long standing demand of the private sector to provide level playing field to both incumbent vis-a-vis the private investors.

Government, certainly deserves a complement as it managed to keep the deadline of corporatising the DTS, despite all odds and protests from the employees associations. The new entity with a workforce of more than four lakh employees has been entrusted with a herculian task of achieving the teledensity of 15 per cent by 2010. Being a 100 per cent government subsidiary, whether the corporation would be able to keep itself away from government controls especially in day-to-day functioning, it would be interesting to watch what role BSNL plays within the given parameters.

While launching the BSNL, the Communication Minister Mr. Ram Vilas Pas wan had said that the ministry would pursue the case for granting Navratna status to BSNL. Even more power would be granted to the new entity for taking, important decisions especially with respect to forming joint ventures and  acquisitions of other related companies in the telecom services. "The new entity will have all investment and operational freedom given to Navratna PSUs," Mr. Paswan said. The erstwhile DTS was running into a profit worth over Rs. 7,500 crore in the last financial year. Mr. Paswan said there should not be any problem for granting total functional autonomy to the new entity right from the one of its creation.

By transferring assets worth Rs. 63,000 crore the government created the largest Indian Telecom outfit of the size of a fortune 500 company, which would be empowered to venture any areas of communication including basic, cellular and internet. A contingency fund was made available for two months operations in order to meet new entity's initial expenditure. 

The Minister has assured the employees of full security in the process of change. Mr. Paswan in fact said that he would continue having a dialogue with the employees' representatives for some time till all the pending issues were sorted out. He also announced formation of a high powered sub-committee to look into all these issues. As per the guidelines and terms and conditions of the new entity, BSNL will be provided level-playing field vis-a-vis private operators and it will operate on commercial basis. Mr. Paswan said adding that the consumers would be ultimate beneficiary as BSNL would be competing with other players. 

BSNL, with an authorised capital of Rs. 10,000 crore, started with a paid-up capital of Rs. 5,000 crore and a loan component of Rs 5,000 crore and it will take all the responsibility of providing rural communication entrusted to erstwhile DTS. 

Terming the new entity a "gold mine", Telecom Secretary Shyamal Ghosh said the new corporation, where government has 100 per cent stake, would have a net worth of Rs 58,000 crore. He added that "sky is the limit for BSNL as it can enter cellular, internet and long distance (SID) communication." In fact, BSNL will have All-India internet providing licence and it can start the services from day one.

On the other hand, the Indian Telecom Services Association (ITSA), which had earlier protested appointment of a non telecom services cadre secretary Mr. Vinod Vaish in the DTS, has now sought empowerment of BSNL and also demanded that all functional director with the exception of finance should be from the cadre of Indian Telecom Services (ITS). Though the government according to ITSA representative, has agreed to this demand but no written communication has been sent to the associations as yet. 

The cost of unviable operations, such as providing telephone services in the far flung areas, has been estimated at Rs 13 ,000 crore in the very first year which will go up to Rs 16,000 crore next year. "We do not want any subsidies but a proper compensation package so that the new corporation does not become sick from the very first day of its . inception," ITSA General Secretary Mr. U K Srivastava said.

Among the major apprehensions and objections raised by various unions were security of employee's jobs and continuation of pensions to be paid by the central government under existing terms and conditions. The government has agreed to this' demand too but according to source, the Trade Union have asked for a written assurance for all these agreements. 

It has been pointed out that provisioning under Universal Service obligation (USO) for compensation towards managing unviable operations in the social interests was not enough. According to ITSA officials, the government had just provisioned five per cent of the DTS revenue of Rs. 20,000 crore towards USA which would yield Rs. 1,000 crore only against this cost of unviable operations is estimated at Rs. 13,000 crore in the first year. 

The unions also demanded a Secretary level status to the chief executive of BSNL reporting directly to the Minister in order to cut own red tape. All these demands of the employees' representatives, partly have been addressed and for the rest the minister has given an assurance to look into it.

According to senior officials in the communication ministry, all telecom circles in the country will be converted into subsidiaries of BSNL and each circle will be responsible for its own expenses and revenues in the planned setup. A final decision on turning each circle into a subsidiary is likely to be taken soon, sources said adding that since the board of directors is in place now such decisions can be expedited. All the circle have been asked to open new accounts with the State Bank of India. 

Though there is a plan to offer Voluntary Retirement (VR) to the employees of the BSNL, but on this issue, Cabinet is yet to take a final decision. As such over 4,00,000 employees have started on deemed deputation along with their posts on existing terms and conditions. Their status as the central government employee will continue till the date of their absorption.

According to a Cabinet decision, the group 'A' officers may be given an extended period of deemed deputation upto five years while deciding upon the cut off date. The government was considering formation of a expert committee to work out arrangements and future strategy in regard to cadre managements of class A officers. 

The government has corporatised the services section of the Department of Telecommunications (DOT), while the policy making is still with the DOT. The decision will send positive signals to overseas investors about government's commitment towards reforms in the telecom sector. But on the domestic front the job is not going to be easy for government. Whether all demands of trade unions are going to be met or not is yet to be seen. For the time being the government has ruled out any divestment in the equity but that too could have repercussions on day-to- day function of the corporation as the government would be having full control over the corporation. How this works out is a question yet to be answered.

(By Arrangement with Kaleidoscope)