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Business Commentary/Mahesh Nair

Paswan's free lunch

I admire Ram Vilas Paswan. Last week when the Union Minister for Communications wangled free telephones for his 350,000 Department of Telecom employees, the Indian media was exasperated. Armchair economists felt that this was a serious blow to reforms: how could we be doling out freebies when we should be tightening our belts?

Political analysts felt that by fawning upon Paswan and snubbing Finance Minister Yashwant Sinha, Prime Minister Vajpayee was sending a not-so-subtle message to his alliance partners that he was more than willing to accommodate their whims.

Armchair hacks, like yours truly, think that there is more to the entire episode than what has been reported. I think Messrs. Vajpayee, Sinha and Paswan have very cleverly played their parts.

Critics of Paswan think that he is doing all this to win mass support.

After all, he was the key instigator during the Mandal agitation which resulted in reservation of jobs for the backwards classes. He was also one of the most vocal supporters prodding the Gujral government to accept the disastrous proposals of the Fifth Pay Commission.

I don't agree. I don't think Paswan doled out the phone freebie for votes or popularity. Even without such freebies he can any day win more votes from the public than the members of the entire Congress Working Committee (minus the lady from 10 Janpath) can muster.

Moreover, the decision to give free connections is not actually Paswan's. The decision it seems was made in 1998. The then Communications Minister Sushma Swaraj had issued a government notification that all 'retiring' employees would be granted a free connection. The employees would automatically 'retire' when DoT was corporatised; they would then be 'recruited' by the new corporate.

Maybe Paswan was not aware of this notification; maybe he was. It doesn't matter since the actual announcement was made last week.

The big story is not that Paswan bagged free telephone lines for his employees, and decided to write off about Rs 700 million. The Railways, Indian Airlines and Air-India, too, offer free passes to their employees.

Most of the ministries offer their bureaucrats free cars. Almost every government department gives its employees free housing (sure, they have to pay a token rent, but then so does the telecom employee have to pay to make calls).

So what's the big deal?

The real story is that the deadline for the corporatisation of the DoT has now been finalised. Paswan has got the employees' consent as a quid pro quo. Come October 1, the Bharat Sanchar Nigam will be born even though some DoT employees union are now protesting that they haven't yet given the green signal for the corporatisation.

What does the corporatisation of DoT mean? It means accountability, professionalism, competition, wealth-generation, and better service.

Think of how the VSNL and MTNL corporate structure functions today and you'll have a fair idea of what BSN can be in a year or so. And if the government were to divest say about 15 to 20 per cent in BSN, it will be a Goliath in the Indian stock market -- after all, it is the number one telephone operator in every city and town of India, except Bombay and Delhi.

So what's wrong with giving free telephone connections if you can create one of India's largest corporations?

I think the Paswan formula of buying economic progress with freebies is brilliant. Let's see what freebies we have to give to corporatise or privatise the following government-owned organisations:

• Maruti Udyog Limited: One free Maruti 800 to each employee.
• IOC/HPCL/BPCL: One free LPG connection per employee.
• LIC/GIC: Free insurance policies to employees.

If you give away these as freebies, the value that these organisations will generate once they are privatised will more than compensate the total cost of the freebies. What's more, employees, customers and shareholders will be happier.

If you think this is a ridiculous manner of going about reforms, hold on. The Minister of State for Railways Digvijay Singh recently announced that the ministry was seriously considering introducing a superfast train between New Delhi and Howrah. The train would run at a speed of 240km/hr and the engine would be imported from Japan.

Since it would be impossible for the driver of such a train to physically spot the signals whizzing by, there would have to be a wireless signal system. And yes, miles of new track would have to be laid-- straight, hi-force resilient tracks (top speed trains must avoid curvaceous routes) will have to be put in place.

The estimated cost of Singh's pet project? Rs 150 billion.

To recover the cost the price of each passenger ticket would be thrice the cost of airfare.

Between Digvijay Singh and Ram Vilas Paswan whose model of progress do you prefer?

Business