Saturday, June 27, 2020

Business by Govt vs Private

Indian government filed cases against Telecom companies like Vodafone, Airtel and Jio saying, they have to pay tens of thousands of crores as dues. When the same rules are applied to few other companies (called as Public Sector Undertaking) like Power Grid Coporation, GAIL India and Oil India etc., the dues would cross one lakh crore. But, those companies don't need to pay.

For those, who say that, the original case was related to Telecom companies, the other companies also bought spectrum and the exact same rules can be applied. If it is unfair for the PSU companies, it should be unfair to Vodafone, Airtel and Jio as well. 

Of course, if government wants to change the rule, it would change to something like, if the revenue from X business is more than Y% of the company, then this rule is applied, and they carefully choose X and Y, in such a way that, the companies that they want to target would fall in that category. 

I don't see BSNL in the list. Does it mean, BSNL paid all the taxes and fees as per the rules set by the Govt, just like it set to any other private telecom company? If it had really paid the taxes and fees as per the rules, what is the overall profit (or loss) of BSNL? If it is in losses, does it mean, a common man has to pay the tax/fee because of the mismanagement of the company? 

All the state governments run the buses. If any private player wants to run a bus, first they have to get a permit. The permit amount is pretty huge. Apart from paying the permit amount, they need to get the approval from the concerned minister/official. That permission would cost them a lot unofficially. Government run buses won't pay any permit fees whatsoever and obviously, they don't need to pay any amount unofficially. But, the private bus operators have to fight with the government run buses on the fare. On peak days, when the private bus operators increase the fare, we would crticize them for exploiting. 

Air India is in losses. Still common man is paying for the losses of running Air India. If the same thing happens to private operators, the company would be closed down, like King Fisher or Jet Airways. Only the shareholders of the company would lose and not the common man. 

The profit and losses are calculated differently for government and private companies (May be except in the sectors that are reformed like Coal etc.). When the government industry is trying to get something out of the natural resources, the revenue minus the expenditure is considered as profit. Whereas, for the private industry, one has to deduct the license fee to extract the natural resources, which is typically more than all other expenditures. When that government industry is in Profits (on books), the employees would fight for increase in the salaries, bonus etc., saying it is in profits. Many times, the profit that they say the got is far less than the license fee they would have got, had they given to a private player in fair means. 

Everyone says, Private companies are exploiting. But, in reality, Government is exploiting private sector and trying to show as if the private companies are demons. 

Eventhough India got partial Independence in 1991 (No. It did not get it in 1947), still Government is trying to reduce the freedom of the companies with something or other.

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