Communications minister Ram Vilas Paswan sends corporatisation economics into a tizzy

Click here to EnlargeCommunications minister Ram Vilas Paswan is at it again. In 1997, as a member of the United Front cabinet, he held the cash-strapped government virtually at gunpoint to make it dole out Rs 12,000 crore.It had to accept the Fifth Pay Commission recommendations at one go, and without the riders for staff reduction and output maximisation. Earlier this year, in his new avatar as a member of the A.B. Vajpayee-led Cabinet, he announced that extra-departmental staff of the Postal Department would be regularised - an action that would have burnt new holes in the department's tattered pocket. Finance Minister Yashwant Sinha had to intervene to curb Paswan's populist spree. Last week, Paswan took the Sanchar Bhavan - home of the Communications Ministry-by surprise when he announced that each employee of the Department of Telecom Services (DTS) would be given a telephone connection free. In addition, the basket of charity would have 250 free calls a month and the waiver of the Rs 150 per month rental. Click here to EnlargeWith 3.02 lakh Class III and IV employees of the DTS' total strength of 3.2 lakh (officers generally enjoy free phones) being the lucky recipients of Paswan's largesse, its cost is being counted by the department's economists at around Rs 300 crore per year.Paswan has also announced a bonus costing Rs 70 crore a year, though officials are not including it in the "free connection" bonanza. Some bonus would have been paid anyway, it is argued. Their calculation also does not include the average installation cost per line, which officials estimate at Rs 22,000 at current rates in the city areas. This cost is left out of computing the tab as telecom accounting presumes that the installation cost will be realised from future call charges.Nevertheless, with the price of Paswan's generosity calculated even by such lenient standards, the decision could not have been more inopportune. The Government is committed to get the DTS corporatised by April 1 next year. It implies that the labour productivity of the new corporation must go up considerably. At present, DTS needs one employee to run 100 direct-exchange lines (DEL). In France, on the other hand, where the largest service provider France Telecom is still state controlled, 1,000 DELs are managed by a single employee. As DTS struggles to shed its non-technical employees, Paswan's freebies add a financial deadweight to the restructuring plan. FAMILIAR RING RAILWAY MINISTER YEAR: 1996 SOPS: Regularised jobs of three lakh temporary workers. Created nine additional zones. Burdened government with an extra Rs14,500 crore RAILWAY MINISTER YEAR: 1997 SOCIAL WORK: Turned Rail Bhavan into extension of Dalit Sena office; recruited one crore members. Issued free rail passes to Sena men COMMUNICATIONS MINISTER YEAR: 2000FREEBIES: Announced free telephone connections for 3.02 lakh employees unmindful of the cost to the government. Says it will motivate staffThe minister made the announcement at a crucial time when the department's three employee federations-affiliated to the BJP, Congress and the Marxists-had come fairly close to agreeing on the corporatisation proposal. A highly placed source in the ministry told INDIA TODAY on the condition of anonymity that the federation representatives had not demanded free telephones "at any point in the negotiations". They say it was Paswan's way of putting himself on the messiah's pedestal.The minister nevertheless has his own argument, and his own accounting system. He says, "I am giving the government a profit of Rs 7,500 crore. But take the airlines staff who are given free passes even though the airlines are running at huge losses." The argument's flaw lies in the fact that free passes are given to airline and railway employees following an international agreement with transport workers to which India is also a signatory. However, there is no such agreement in the telecom sector. Besides, no telecom service provider in the world handling more than 10 million DELs (DTS runs a network of 23 million connections) is known to have given free connections at the homes of its nonexecutive staff. "It is unheard of," says a telecom expert in Morgan Stanley, a US investment banker.The minister is not particularly strong on numbers. "This is just going to cost us Rs 100 crore," he told INDIA TODAY about the gift of telephone connections to employees. That's a third of the real amount, which should obviously include the cost of capital to be spent on installation. DTS economists put it down to the opportunity cost of the capital, calculated at 18 per cent a year. This cost alone is a huge Rs 212 crore. It does not figure in Paswan's calculation as capital comes free, at least in a populist economy. Besides, the profit earned by DTS is not meant for the government but is spent on its own expansion programmes. Nor is the "profit" calculated in the economic sense, by adjusting revenues against all expenses at cost. Till now DTS is no more than a government department, with most of its expenditure not shown at real cost.Moreover, Paswan is pushing up the cost incurred on employees at a critical juncture for the sarkari telecom sector which is poised for a substantial reduction of tariff in an increasingly competitive market. Earlier, in March last year, the Telecom Regulatory Authority of India (TRAI) passed a tariff order for substantial increase in rental and local call charges and sharp drop in STDISD rates. However, TRAI soon came up with a revised tariff package rolling back most of the proposed increases in rental and local call charges but it did not alter the proposal to cut long-distance tariffs. In 1999-2000, DTS' internal resources dropped from Rs 11,000 crore to Rs 9,000 crore as a result of the fall in long-distance rates. Its finances will worsen with the national long-distance lines being privatised later this year. Paswan has begun showering free gifts on employees at a time when DTS is on the threshold of a competitive market.His unorthodox measures are, ironically, finding some supporters even within the ranks of DTS officers. Says A.K. Sinha, president of the Indian Telecom Service Officers Association: "We think too much is being seen into the entire exercise. Due to the minister's action, many linemen who are ordinarily not contactable may be contacted in 24 hours at home for sorting out faults. That's a benefit for the consumer."JUST how contrived the argument is can be gauged from the reaction of any telephone user familiar with the DTS staff 's delaying tactics. Phones often lie dead for months, and repair staff demand illegal gratification quite openly. There are thousands of such complaints piled up before DTS' cell for re-dressal of public grievances. It is also one of the world's most fault-ridden mega network. In 1999-2000, there were 14.8 faults per 100 "stations" (telephones and extensions)-which is an outrageously high rate in a modern telecom system. Telecom experts regard two faults per 100 stations as quite alarming. Nor is Sinha's argument- that the faults are caused by linemen's unavailability-a tenable one. DTS officials told the Parliamentary Standing Committee on Communications earlier this year that the high fault rate was due to "damage and theft of cables". The point concerning the staff not being available on phone at home was not mentioned once.Paswan is quite an odd man out in a ministry that is committed to ushering in pathbreaking technological and organisational changes. The Government craves for an Internet revolution, but its success hinges on a telecom network that can function faster, cheaper and better. Last year, DTS slipped on most of the targets- optic-fibre cable, DEL and local switching capacity-largely because of the collapse of the government, the Kargil war and the mid-term poll. This year, Paswan's populist measures have added a new dimension to its problems. Officials fear that his charity may be read by some of the workers' federations as a signal to resist the corporatisation drive.The problem with the Bihar Dalit leader is that his social justice agenda always takes priority over ministerial obligations. Paswan heads the Dalit Sena, which claims a membership of 10 million. He is obviously trying to build up a base for the Sena in the Communications Ministry, the largest employer after the Railways. His aborted attempt to regularise extra-departmental workers of the Postal Department is a part of the same exercise. Scheduled Caste members comprise a large fraction of casual postal workers. His official bungalow on Janpath, next to Congress President Sonia Gandhi's residence, has been converted into the Dalit Sena headquarters. The first floor of Sanchar Bhavan, which was till recently occupied by technical staff, is now choc-a-bloc with Sena activists assembled on the pretext of getting the minister's darshan.Will Paswan's subaltern politics stand in the way of DTS' corporatisa-tion next year? Ministry officials say it may not, for the conversion has the Cabinet's sanction. After the telecom services come under the purview of a board of directors, the minister becomes an honourable irrelevancy. - with Sanjay Kumar JhaPublished By: AtMigration Published On: Jun 12, 2000 00:00 IST--- ENDS ---

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Communications minister Ram Vilas Paswan sends corporatisation economics into a tizzy

Communications minister Ram Vilas Paswan sends corporatisation economics into a tizzy with his free-phone largesse for employees.

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