With an approach contrasting with the case of Air India, or potential plans for some financial PSUs ahead, the Central government has decided to continue to bet, and bet big, on a loss-making public sector behemoth, the Bharat Sanchar Nigam Ltd (BSNL), by deciding to invest Rs 1.64 lakh crores to absorb all its debts. Out of the total bailout package, Rs 1.2 lakh crores would be non-cash, and the remaining nearly Rs 44,000 crores would be in cash.
The Narendra Modi government, which saw Air India and the civil aviation business as no longer viable or sustainable for public investment and chose to exit, sees a very significant social purpose in the huge investment – the need to extend 4G services to the rural market.
This is line with a policy to have one major PSU in each crucial sector of the economy where the government realised private players would not be able to play a role in non-profitable endeavours for a larger cause. Earlier, the MTNL was merged into BSNL, too, moving towards the integration of all public investments within the sector.
In the decision to revive the BSNL, the government would also merge another PSU, the Bharat Broadband Network Ltd, with the former. The government is expressing a welcome conviction to connect every gram panchayat in India with high speed Internet, which is a step towards building infrastructure for inclusion of villages. As the minister proclaimed, both market stability and national security were key considerations behind the move.
The decision demonstrates that the Modi government, while being a votary of continuing liberalisation and reforms, approaches it with a pragmatic mindset rather than an ideological either-or viewpoint. Such a moderate approach bodes well....