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Raison d'être for continuance of the Public Sector

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Economy

Is this why they won’t disinvest Air India, kept afloat at massive expense to the taxpayer? In a violation of DGCA rules, an AI aircraft was pulled out of a scheduled flight from Delhi to Coimbatore in order to ferry IPL players, apparently at the behest of aviation minister Praful Patel’s daughter Poorna. It appears the public sector airline fulfils the private and nepotistic purposes of public servants.

For the full report in the TOI, click here.

Isn't this also why the government persists with BMTC/ KSRTC (check this), BESCOM, etc, so that they can further the interests of the Poorna Patels of this world? - all in the name of Socialism; the tax payer be damned.

Muralidhar Rao

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murali772's picture

DGCA rules do not apply to AI

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Two conclusions emerge from Air India’s statement: One, passengers booked on Air India flights should now know that they could be put on to other flights if the airline gets a request for a charter operation and the airline will inform the passengers concerned in advance about the change in schedule which according to the airline would mean there is no inconvenience to the passenger.

Their fate could be like that of the passengers booked on Delhi-Coimbatore flight IC 7603 on April 20 who were flown on Delhi-Mumbai-Coimbatore flight IC 657 to accommodate the IPL charter flight. The fact that they reached their destination three hours later would be considered unavoidable as the flight diversion would be in the commercial interest of the airline.

Jadhav has also said, "Air India has not violated any of the rules governing the flight operations by this service." That leads to the second conclusion: that the DGCA’s Civil Aviation Requirement, Section 3, 10.2 which pertains to Air Transport (effective from March 1, 1994) and states that, "Scheduled operators (airlines) can conduct charter/nonscheduled operations for transportation by air of persons, mail or goods provided such flights do not change their normal approved operating schedule’’, does not apply to Air India.

For the full report in the TOI, click here.

This is exactly what happens when the goverment becomes a player, instead of remaining just the facilitator and regulator - there's no longer a level playing field - check this

 

Muralidhar Rao
psaram42's picture

Level Playing field and the development mantra

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 The Reason or justification for BTS a public road transport organization monopoly is perhaps justifiable as the city roads are a public property. If private transport busses are allowed to compete with BTS busses there could be a chaos on the existing road net work of the city. 

However in the case of air transport the airport can cater for the total air traffic public and private. Air India preferential chartering for state exigencies cancelling already booked flights may be justifiable. However the same favor for IPL that too on the behest of a minister’s daughter appears to be nothing but high handedness. This only shows the clout BCCI, a money spinning industry, has with the government. The AI charter rule book needs to be amended in a hurry. 

This sort of misplaced development mantra (of money laundering?) may be the reason behind growing discontent in the country, in the form of the current naxalism revolt.

murali772's picture

airways also cluttered, please!

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The Reason or justification for BTS a public road transport organization monopoly is perhaps justifiable as the city roads are a public property.

Air is also public property

If private transport busses are allowed to compete with BTS busses there could be a chaos on the existing road net work of the city.

And, the proliferation of private players is cluttering the air-ways across the country - so why not go back to the good old days of Indian Airlines monopoly? And, more

 

Muralidhar Rao
psaram42's picture

It is democracy at work

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 It is elementary knowledge that democracy is as good as the people of the country. You get what you disserve. It requires a majority opinion to make laws. IPL is there because people wanted it. It may not be there after the third version, if they do not wish so. Thanks to the hue and cry the people are making. I understand private enterprise can be good or bad depending on the competition being healthy or rotten. 

The point I was making was a possible reason why people like the government Bus service. I for one love the Mysore Bangalore non stop Iravats. I have travelled in pvt busses too. Some are good some are not. Privatization is not a universal mantra. Things will normally settle to the equilibrium point. Telecom sector is an example. Though BESCOM enjoys big free real estate, it has so far failed to impress. I shifted long back to Airtel headed by Mr. Sunil Mittal. All Mr. Mittal’s work in many diverse fields is par excellence. His integrity is also beyond doubt, I think, at least till proved wrong. 

I would like to draw your attention to a much bigger issue of global warming. Air travel contributes 1 kg of CO2 per person for a single flight per hour, let alone cluttering of air space. One can easily be blinded by ones ambition to make money be it of any hue.

Naveen's picture

Compare like for like

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Mr Murali,

What Mr Ananthram is trying to convey is that city streets in India are already heavily cluttered & the introduction of competition on roads for public transport will lead to further chaos - we have discussed this in detail many times earlier, particularly here.

Air space, though public, isn't cluttered & in any case, aircraft operation is such that movements require to be closely monitored continuously by ground staff. Further, volumes are not as large as public road transport & the clientale is upmarket whilst costs of aircraft are also huge. Thus, aircraft business differs considerably from road transport.

In a country where governance is known to be highly inefficient & notorious for manipulation by every entity concerned for personal gain, be they public or private, enforcement of passenger safety on roads 24x7, 365 days a year will be a huge question mark - eg. blue line buses that were killing pedestrians routinely as part of their operations.

I don't think there is any doubt left that privatization of city bus public transport will only worsen things since enforcement on anything is downright abysmal & such moves will only open up new venues for bureaucrats to take bribes & bus operators to routinely offer bribes for permits & this coterie fleeces public even more, unless miraculously, our culture changes or is forced to change to implicitly follow laid down procedures & rules - this seems impossible, as of now.

Many private airlines have also been fleecing the public - these sort of complaints are not confined to AI or IA alone.

psaram42's picture

A better opportunity is there in RWH

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 Murali sir, 

Why are you so silent on Rain Water Harvesting issue? Have you joined Suhas yet on this project? It is high time that a person like you should have joined. I am toying on a project for my road [9th main HAL III Stage] for charging the entire rain water in to the ground in situ. 

First let me do it for my own house.  I plan to extend it to the Storm Water Drains in my road viz 9th main HALIII stage Bg75. Are there any takers?

murali772's picture

don't deviate, please!

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@Ananthram - RWH is being discussed under quite a few other posts. Why do you bring the matter here, please?

Likewise, bus services monopoly issue has been discussed at length, rather ad nauseum, here, apart from a number of places elsewhere. It would have been better if you had placed your comments in one of those, and linked it to a short comment here.

@ Naveen - Haven't we gone through all of this before, please - like in the post linked above? There's clearly no agreeing between us on these issues. So, why don't we just agree to disagree, please? And, again, apart from the  comment "Many private airlines have also been fleecing the public - these sort of complaints are not confined to AI or IA alone", the rest would have been better of posted elsewhere.

And, as for 'fleecing the public', please go on to 'yatra.com', or any flight booking site and see who is offering the best fares.
 

Muralidhar Rao
rs's picture

Privatization of bus services..

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I suppose privatization of bus services could be a good idea - but not with several operators. Instead, if BMTC itself is privatized. With several operators - since there never is enough regulation - there will be chaos on the streets - as can be seen in the difference between private and public long distance bus stands. On the other hand, private busses work well for long distance.

In Bombay, BEST  - which is a really excellent service - was started and run by the Tatas for many years - till it was nationalized - like several other things. Air India was one of the best airlines in the world when it was private under JRD Tata. In theses cases, though - the only company was a private one - there was no competition for seats. I think this is a viable alternative to the current situation. Its also likely in this way the bus drivers would be more accountable - and wouldnt be able to get away with murder as they occasionally do.

Ramesh

 

psaram42's picture

Reason for continuation of Public Sector

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 Air India as a Public sector undertaking is there to stay in simple English. I thought that that is what you are discussing in this thread. This is due to the fact that in a democracy laws are made on majority principle. If the purpose of this thread is to garner support for privatization of public transport I am not with you. I also feel that this may not be a forum for such discussions. I am wiling for a praja debate on this issue at best perhaps in the Lokasatta party forum. 

The point I have made above is that Air India rule book needs to be amended, (as regards charter flights) not banning Air India as a Public sector undertaking itself. That means banning public sector undertaking is also included. I hope I have cleared any doubts of what is being discussed here.

 

Naveen's picture

Best fares - Not necessarily best services

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Please go on to 'yatra.com', or any flight booking site and see who is offering the best fares.

Best fares do not always guarantee best services - I hope this difference is understood better. I travel a lot by air within India as well as overseas on employment. Whilst there are some good private airlines (charging higher), there are also ones that cause hardships & inconvenience customers with cancellations, delays or re-routing without offering explanations, & this happens all over the world with many airlines, public or private, despite guidelines such as the DGCA rules.

Thus, AI or IA are not alone in resorting to this. There isn't much point in bringing this up as an issue for comparison between public & private & claiming that this happens only because AI or IA are public sectors.

However, I agree broadly that with private airlines operating now in India, people have some choice & one can choose a flight based on preferences & to suit different pockets.

pathykv's picture

PUBLIC TRANSPORT

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Under present circumstances what we need is not privatisation of BMTC, but parallel operation for last mile connectivity by private operators with Mini buses. This is working fine in Tamilnadu with all nooks and corners being covered at very competetive low fares by private operators, still making huge profits due to the efficiency of operation without wastage.

K.V.Pathy

idontspam's picture

private last mile

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but parallel operation for last mile connectivity by private operators with Mini buses.

Sounds like a good suggestion to me.

murali772's picture

huge opportunity

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@Ananthram
Air India as a Public sector undertaking is there to stay in simple English.

AIR-INDIA's privatisation is inevitable, whether you support it or not - take a look at this

The point I have made above is that Air India rule book needs to be amended, (as regards charter flights).

It's already there in the DGCA mandate, and the AIR-INDIA rule book has definitely to conform to that. The question is of keeping to the rules. Whereas, when the government carrier does it, the DGCA is forced to look the other way, but if a private player does it, the MD will perhaps find himself behind the bars (as it should be).

@Naveen
However, I agree broadly that with private airlines operating now in India, people have some choice & one can choose a flight based on preferences & to suit different pockets.

That quite sums it up. Healthy competition alone is what can make the difference, including in public bus services.

Incidentally, on the question of safety, over the last one week (including today), not a day has passed without one reading about some accident or the other involving BMTC/ KSRTC buses, many of them involving fatalities - yes, that's a separate subject

@Pathy Sir & IDS
Let's move the "PRAJA bus services" - check this. It's a huge opportunity at social entrepreneurship
 

Muralidhar Rao
pathykv's picture

PRAJA Bus Service

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Dear Mr. Muralidhar,

I agree. What next?

K.V.Pathy

idontspam's picture

Next...

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I agree. What next?

We apply for a stage carrier license?

murali772's picture

I'll move it

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Yes, I shall file a formal application within the next two days. I had done that some 4 years back, and had received a reply saying that 'Bangalore city is a monopoly area for BMTC', or something to that effect. I expect I'll get a similar response. We will then move the PIL.

I expect this time around, I'll have the full support of atleast the PRAJAGALU.

Muralidhar Rao
psaram42's picture

I think a very good decision has come out of these discussions

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  I think a very good decision has come out of these discussions on this thread. I hope government should be able to give go ahead signal fast. It will be really interesting. Congratulations and Good luck Murali sir.

murali772's picture

covert neta perks

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Air India is in abysmal financial health, needing constant bailouts with taxpayer's money. Yet it is owed some Rs 480 crores by MPs, most of them from the UPA! Why doesn't our honest Prime Minister compel them to pay it, upon penalty of removal from the Party, instead of making the taxpayer pay? This is the reason why the Government cannot think of privatising the airline - its minister's would lose the advantage of its 'fly now, pay later (or don't pay)' scheme. In order to quash protest from its management, the CEO of the airline is offered the bait of lifelong free air travel for self and family!"

The above are the excerpts from a mail sent on a y-group. Though the source was not identified, I am certain the statements can't be disputed.

Muralidhar Rao
murali772's picture

serving their current purpose

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He alleged that the factory’s land has been sold to 53 individuals so far.

“According to the information obtained by the association through RTI, the land has been sold at Rs 200-400 per square feet while the market price was Rs 2,000 per square feet  between 2004 and 2006. It’s rate stands at Rs  4,000-5,000 now,” he charged.

The former employees of the factory also pointed out that HMT’s internal inquiry had found former Chairmen Ramanujam and Zahid had misappropriated funds to the tune of `550 core through the land sale. They demanded that they should be brought before law immediately.

For the full report in the New Indian Express, click here.

HMT, ITI, AIR-INDIA, etc are very much serving the only purpose they exist for today - lining the pockets of neta's and their cronies.

Muralidhar Rao
murali772's picture

patronage raaj

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According to them, 15,000 party workers have appealed to the KPCC to consider their names for appointment to various boards and corporations. There are about 70 boards and corporations, and another over 2,500 directors’ posts that could be filled with party workers or legislators.

For the full text of the report in the New Indian Express, click here.

Need anybody say more?

Muralidhar Rao
murali772's picture

Who will want to touch it now, even with a bargepole?

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Privatization of Air India could be considered if there is political consensus, aviation minister Ajit Singh said on Saturday. He indicated that it may not be possible for any government to keep funding AI beyond the existing Rs 30,000 crore package spread over nine years.

- - - - Asked will AI get an investor when Kingfisher with a much smaller debt and losses (compared to AI) has not been able to get one so far, Kaul (chief of CAPA - Centre for Asia Pacific Aviation) said the two airlines are very different.

"Kingfisher has been grounded for over a year now. AI is fully operational and has the single-largest market share in international traffic apart from close to 20% share in domestic air travel. AI has huge infrastructure, fleet of 115 planes, pilots and other technical staff. If the government supports a private player, AI can surely get suitors even now," Kaul said.


To read the full text of the report (which is well worth the effort) in the ToI, click here.

Perhaps too late now - the liabilities are far too high, and rapidly mounting. The only way out appears to be to shut down the operations right away, cut the losses by auctioning all the assets, and write off the balance.

The moral of the story is for the government to get out of all services and manufacturings, and stick to its job of governance.

Muralidhar Rao
Sanjeev's picture

Same story was heard few years back on the Airports Privitizatio

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Look at BIAL story :

What way BIAL is efficient in economical operation. Remove life line of Rs 350 Crore interest free loan to BAIL,  25 Years no Airport operating with 150 Kms of radius including HAL Airport, 4000 acers at no cost.   Look at how BIAL could not firm up on real estate business during last 7 years and still does not know when it will firm up.

 So increase the UDF  is the solution  and no questions asked on how badly BIAL  had shown the increase in the  Airport Construction cost as RIL did int  their Godhavari Basin KG6.

Who is paying for the inefficieny of Airport Operation of BIAL.   Why BIAL failed to collect dues of 40 Crore from  Kingfisher Airlines,  375 Crore liability to be paid for the Airport Hotel case to L&T / EIH.   40 Crore for faulty road laying inside BIAL premises.  No  Questions should be asked to BIAL on the failure to exploit the real estate business of 4000 Acers  even after 7 years of land possission.

Finally BIAL submits in writting that they are not experienced in Airport operations,  so they r very much uncertain in generating enough income ????

murali772's picture

accountability lies with the government

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@ Sanjeev - So, who should be held accountable for all the wrongs at the BIAL, other than the State and Central governments? Whereas, as the major PPP stakeholder, the State government should have been safeguarding the interests of the citizens, it, led by the then CM, was more interested in using the opportunity to help various neta's line their pockets - another case of "crony capitalism", like the many we have been seeing all over. Further, it is only now, in 2013, that the Central government has notified the "Airports Economic Regulatory Authority" bill, which was drafted in 2008. If the two had played their assigned roles properly, everything would have gone fine.

For all of that, BIAL is still amongst the best of airports in the country. Only, the costs have shot up, because of the commissions and omissions of the government agencies involved, and eventually it is the travellers and tax payers who are having to shoulder the burden.

All of these add upto the point I (and, a few others - notably blrpraj - check this) have been repeatedly making - that governments should be concentrating on facilitation, and regulation (and control, where essential), rather than on providing services and undertaking manufacturing, by themselves.

Let's make no bones about it - the private sector operators are there only to maximise their share-holders' wealth, and that is how it should be, as long as they are playing by the rules and paying their taxes. And, any societal good they may want to do, they term them as CSR (corporate social responsibility). As compaed to that, the raison d'etre of government is social responsibility. Further, Corporates are no Harishchandra's, and if governments fail in their roles as regulators, don't expect them not to exploit the opportunities presented.

PPP's, thus, could be the ideal vehicle for maximising shareholder (amongst which can even be the state) value, through the technical and financial expertise of the Corporates, as long as the state (as the partner) does its job of safeguarding citizen interest, properly. The state's role is thus crucial.  And, the Civil Society (alongwith the media)'s biggest role is to keep a check on the state.

Muralidhar Rao
Sanjeev's picture

Airport hotel, a project in limbo

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Miscalculation of building height in the original plan proves costly.

Faced with mounting challenges to fund its expansion plans, the Bangalore International Airport Limited (BIAL) is seeking a 131 per cent hike in landing fee for international flights and a hefty increase in User Development Fees (UDF).
But its revenue generation capacity wouldn’t have been in bad shape had its five-star airport business hotel project taken off in right earnest. 

The hotel construction --said to be about 60 per cent complete -- is now on hold, and there is no hope in the horizon for the work to restart anytime soon. Here’s why: BIAL has challenged an order by the Arbitral Tribunal that directed it to pay Rs 301 crore to the consortium chosen to build the hotel. The airport promoters’ burden also includes 18 per cent interest for delayed payment, and refund of a security deposit of Rs 76.4 crore with interest at the rate of 18 per cent.

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The consortium of hospitality major East India Hotels (EIH) and Larson &Tourbo had bagged the rights to design, construct, finance, commission, maintain, manage and operate the hotel. As early as November 16, 2006, BIAL and the two consortium partners had inked a Framework Agreement and a joint venture company, Bangalore Airport Hotels Limited (BAHL) was incorporated. BAHL had paid the security deposit in 2006.

The project began to falter once the Airports Authority of India (AAI) issued its No Objection Certificate (NOC) for a building height of only 30.35 meters from the ground level, way below the 45 meters specified under the original bid. After BIAL issued an in-principle approval for the hotel’s layout and plan in October 2007, it took over a year, November 14, 2008 to be precise, for AAI to issue its NOC.

The cascading effect of this NOC proved extremely tricky for the project. The original plan for a hotel with 321 keys and a total area of 273,404 sq ft had to be reworked.
The number of rooms were to be reduced.

The Consortium, which had already commenced construction, wanted certain concessions from BIAL since the terms of the Framework Agreement had changed. When talks failed, the parties agreed to go in for arbitration. The tribunal’s ruling, however, proved a shocker for BIAL. It has now challenged it in the Principal District and Sessions Judge, Devanahalli, a process that will take much time. 

But questions are now being asked as to why the building height was miscalculated in the original plan, although the stakeholders had enough expertise in airport infrastructure specifications.

This single factor, which could have been sorted out through initial consultations with AAI, eventually proved decisive.

An aerodromme expert contended: “Very few hotels in the City have 300 rooms. The airport hotel could have generated big revenue and catered to pilots, crew members besides the big ticket visitors and businessmen.”

State government officials said the calculations were taken when Zurich Airport was a major stakeholder in BIAL. The GVK Group had acquired 12 per cent stake in November 2009 from Zurich Airport, which earlier held a 17 per cent stake.

It is learnt that negotiations to find a new firm to complete the hotel are now in an advanced stage. But construction can begin only after the arbitration process is completed and the payments made.

It would still take another seven to eight months before the building is ready. Sources said BIAL would have to keep its cash flows within limits and approach banks for more “expansion” funds.

http://www.deccanherald.com/content/362427/airport-hotel-project-limbo.html
 

Yes, BIAL is most efficent in terms inefficency in dealing.  Its one more NICE project ???

although the stakeholders had enough expertise in airport infrastructure specifications.
 

 

murali772's picture

unhappy augury

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@ Sanjeev - What is the point being made here? Is it that the private sector too isn't faultless? But, who ever is saying that? In my earlier post itself, I had stated that they are no "Harischandra's". And, here is another recent example of my helping to expose the unsavory deeds of a builder. There are plenty more on PRAJA, including my winning a favorable award from the Consumer Court in a case against AIRTEL (here).

So, if you want to bring up issues pertaining to BIAL's misdeeds (as you may want to see them), do start another blog.

Besides, here again, as in most of BIAL's "misdeeds" (i'll not call them that, though), the culprit plainly is another government agency, viz AAI, as becomes evident on reading the following line: "The project began to falter once the Airports Authority of India (AAI) issued its No Objection Certificate (NOC) for a building height of only 30.35 meters from the ground level, way below the 45 meters specified under the original bid".

Now, the whole thing is stuck. Please understand that such large private sector infrastructure projects getting stuck harms the economy considerably too, in very many ways, and is not quite a happy augury.

Muralidhar Rao
murali772's picture

baap ka maal hai kyaa?

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Funds worth `9 crore will be given to develop Boga Nandeeshwara Swamy Temple in Chikballapur, Petroleum, Natural Gas and Environmental Minister Veerappa Moily said on Sunday. After performing a pooja in the temple, the Union Minister said the  amount will be given by the Indian Oil Corporation, Muzrai, Kannada and Culture and Tourism Departments.

The money will be spent to develop basic amenities on the temple premises. “A building to accommodate devotees will be constructed and  steps will be taken to desilt the temple pond,” he said.

For the full report in the New Indian Express, click here.

No questions asked, whatsoever. The minister just pulls it out of his pocket and gives it away, in order to nurture his vote banks.

Muralidhar Rao
murali772's picture

Public sector and private uses

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Misuse of government funds can only be described as corruption. Union civil aviation minister Ajit Singh and steel minister Beni Prasad Verma stand accused of misusing government funds for political purposes. In both cases, the modus operandi was the same—force the public sector undertakings under their command to spend a major portion of their funds meant for corporate social responsibility (CSR) on the development of their constituencies.

For the full text of the editorial in the New Indian Express, click here.

As long as you have the "public" sector, they will be put to the "private" uses of the neta's.

Muralidhar Rao
murali772's picture

Unions too beginning to fall in line

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The Indian Commercial Pilots' Association (ICPA, union of pilots of erstwhile Indian Airlines) has written to Modi, saying it is "not averse to part or complete privatization of the airline if done fairly".

For the full text of the report in the ToI, click here.

Finally, even the unions are beginning to give up on furthering the bluff of PSU's having to ride the commanding heights of the country's economy, with the employees themselves having become wiser long ago, evidenced by the Socialism-preaching marauders trounced in the elections, the country over.

That being the case, what is anybody now waiting for? If you ask any Bangalorean as to what his/ her chief pain points are, I expect, he/ she will certainly list the key infrastructure issues pertaining to traffic, power supply, and water supply, amongst them. And, in each of these areas, the problem lies largely with its being handled by a monopoly government agency. Seen from that overall perspective, and based on involved debates over PRAJA, one should think the solutions may lie in the following steps:

1) Improving public bus transport services, through introduction of competition for BMTC/ KSRTC from private players - http://praja.in/en/~bangalore/blog/murali772/2009/04/24/petition-cm-end-bmtcksrtc-monopoly#comment-35865
2) Privatisation of power distribution, on the lines of what the Sheela Dikshit government did in Delhi - http://praja.in/en/blog/murali772/2008/05/28/imperatives-privatisation-power-distribution#comment-35862
3) Outsourcing of water supply (as being attempted in Delhi and a number of other cities in the country) - http://praja.in/en/blog/murali772/2012/07/21/can-sheila-dikshit-make-success-water-supply-outsourcing

The posts linked against each will by themselves give the gist of what they are all about; the entire debate can be read by scrolling up.

These steps by themselves will improve liveability in the cities vastly. Many other things can follow therefrom.

Muralidhar Rao
murali772's picture

All for the loaves of office

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Chief minister Siddaramaiah is facing the wrath of the Congress's rank and file over the year-long delay in reconstituting the 110-plus boards and corporations. These are statutory bodies where the chairman's post is equivalent to that of a cabinet or a minister of state in rank. These help the ruling party to dispense political patronage and keep its party leaders in good humour in addition to accommodating MLAs who couldn't be fitted into the cabinet.

- - - According to party sources, there are about 110 boards and corporations and other bodies such as urban development authorities. It's estimated that, in all, the government can accommodate about 1,300 positions like chairman/vice-chairman, members/directors, which could be filled with non-officials.


For the full text of the report in the ToI, click here.

It's over a year since this ministry took charge. All it has been bothering with is furthering more and more of its Socialist agenda, through various kinds of "bhagya's", and running the state treasury dry. This is even as the erstwhile Congress (MMS) government at the centre, had sought to reverse them, realising the damage it was causing, not just to the country's economy, but even to its own re-election prospects, and the realisation coming rather late, paid the price for it. Apparently, this ministry and the party haven't read the message sent out by the electorate clearly, and their members are only bothered about cornering the biggest loaves of office for themselves.

Meanwhile, our power, water, bus services, garbage management, in fact the entire infrastructure, is just crumbling. Perhaps, it's time we helped ease out this this (non)-government.

NaMo has said "less government; more governance", and from all indications, he's pursuing that line too. May be we too could do with Modi-fied BJP rule, as compared to the earlier Yeddi-fied one.

Muralidhar Rao
murali772's picture

Diversion of bank funds for populist schemes

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A government that describes itself as “pro-market” should also lay out a path to the privatisation of state-owned lenders. It is no coincidence that private-sector banks have experienced only a small fraction of the losses of state-backed rivals. Mr Modi should also aim to scrap socialist-era rules that force all banks to make a fifth of their loans to support farming and that dictate where they can open branches. The government has made some welcome changes. But until it abandons its belief that a state-owned banking system is the right way to allocate credit, India’s banks will hold the economy back.

For the full text of the editorial (emphasis added by me) in The Economist, click here.

I don't consider myself competent enough to comment on all the aspects brought out here. But, very clearly the kind of mis-use that's going on has definitely to do with the excessive government ownership, and that perhaps needs correction.

Detailed below is another form of blatant mis-use that has been going on from long:

Reproduced below are data (for the year ended 31/03/2014 - the latest available) extracted from the Karnataka Power Corporation Ltd (KPCL) web-site:

Gross income - Rs 6,592 cr; PBT - Rs 254 cr; dividend - Rs 34 cr; Total realisation from ESCOMS/ KPTCL (their only customers) for the year - Rs 5,231 cr; Total outstandings as on 31/03/14 - Rs 11,690 cr.

In essence, KPCL's debtors figure is equivalent of 21+ months' billings - meaning its banks are carrying NPA burden of 18+ months. However, the lending banks being all government-owned, are no too bothered about it all, since KPCL also being fully government-owned, they take comfort in the fact that their money is safe. In fact, they have very little work to do, since using the excuse of low liquidity, they generally turn away all prospective borrowers.  

The beneficiary is the state government, which holds onto the money owing to the DISCOMs (in terms of farm subsidy), who are in turn forced to hold on to the money owing to KPCL. And, the government uses the money for all its "bhaagya" (populist) and other such schemes.

Meanwhile, deprived of timely funds availability, the entire power sector in the state is in a shambles, leading to more and more dependence on captive power (more on that is accessible here).

Muralidhar Rao
murali772's picture

Enough of vacillating; please move on

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The government has decided to shut down 15 loss-making public sector units, of which at least five have been cleared by the cabinet, while opting to go against internal advice and revive three state-run companies.

Sources told TOI that there were another half-a-dozen sick public sector companies, which had been identified by NITI Aayog for closure, but their fate remained uncertain amid hectic lobbying by ministries, which want to keep them alive in what may be an effort to protect their turf.

- - - Out of 74, the Aayog had suggested status quo in case of two PSUs, strategic disinvestment of 10, plan for revival with option for strategic disinvestment for 22, transfer of ownership of six, merger of three, long term lease of five and closure of 26.


For the full text of the report (emphasis added by me) in the ToI, click here.

"Protect their turf' to what intent is what is debated in this blog - very clearly it's not altruistic; but, on the contrary, plainly serving the vested interests of a small coterie whose fiefdom these have become. Instead of vacillating endlessly, it's time Niti Ayog moved on, and perhaps time too that the tax paying public, on whose hard earned money these parasites feed themselves, demanded it, and from the rooftops.

Muralidhar Rao
murali772's picture

keep Cheetah helicopters exclusively for netas' use

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Old and obsolete machines -whether they are fighters or helicopters -continue to exact a heavy toll on the armed forces. Three Army officers were killed and a soldier was critically injured when their Cheetah helicopter crashed at Sukna military station in West Bengal on Wednesday -a reminder of the military's ageing light-utility copter fleets.

- - - Though the court of inquiry will establish the exact cause, the crash once again underlines that the armed forces are being forced to fly old single-engine Cheetahs in the absence of modern twin-engine choppers.

Failure of successive governments to take timely decisions, shoddy performance of defence PSU Hindustan Aeronautics (HAL) and recurring corruption scandals have all combined to lead to this abysmal situation.

CheetahChetak light utility helicopters, in fact, are now increasingly being dubbed the “MiGs of the chopper fleets“ due to their high crash rates and poor serviceability .

Based on the technologies of the 1960s, Cheetahs are bereft of modern avionics like ILS (instrument landing), omnidirectional and ranging systems or FADEC (full authority digital engine controls).


For the full text of the report in the ToI, click here.

Perhaps, as a reader has commented "Army officers needs the most trusted helicopters not HAL built coffins. Only politicians including Governors/CM should fly in these helicopters", would be the most effective way to get the government moving on disinvesting/ privatising/ shutting-down the non-performing PSU's, that NitiAyog has repeatedly been 'threatening' to do from long, but has not got down to doing over the two and a half years of this government's rule.

In the midst of it all, strangely, there was a tweet earlier this week by Jayant Sinha-ji that Air-India was proposing to expand its operations. May be Sinha-ji should be accorded the exclusive privilege of travel by the Cheetah helicopters wherever he goes in future.

Muralidhar Rao
murali772's picture

BMTC chief wants to build a super speciality hospital

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The Bengaluru Metropolitan Transport Corporation has initiated process of procuring new buses after a gap of more than two years. BMTC managing director Ekroop Caur said the board approved a proposal to purchase 2158 buses.

- - - Caur said the state government allocated funds for procurement of new buses in the current budget and she urged the state to set aside some more in the next budget to be presented in March.

Speaking on the occasion the BMTC chairman M Nagaraj Yadav said the board had approved a proposal to take up welfare measures for employees.

"We have proposed to build a super specialty hospital for the BMTC employees. Setting up of digital libraries and clinic at traffic transit management centres (TTMC) are among other measures proposed," Yadav said.


For the full text of the report (emphasis added by me) in the ToI, click here.

In the first place, the BMTC is hard put to find resources for replacing its aging fleet. While one would have thought that the politico's in charge would put all their efforts into addressing that problem, what one finds instead is their concentrating on building TTMC's wherever there is any vacant space in their possession, whether it fits into their overall operational scheme or not. Even worse, like in Koramangala, it has meant all the buses getting parked overnight on the main roads,  with the depot space now being occupied by a massive TTMC (check here), this then becoming a major impediment to regular traffic flow. And, for all of that, apparently, most of the TTMC's are half empty, the resulting unmet loan (and interest thereon) burden becoming another drain on BMTC's resources.

And, as if all of that was not bad enough, now a Chairman gets appoinited, plainly due to political compulsions, adding so much more to BMTC's already unbearable burden. And, to top it all, this worthy wants to build a super speciality hospital (it's not as if there are not enough government hospitals already, but, yes, this largely is their state; and another government run hospital can't be any better), nothing less, exclusively for the employees.

The fact of the matter, very obviously, is that TTMC's, hospitals, etc mean massive building contracts, and thereby the pursuit of such objectives. Commuter facilitation, employee welfare etc are plain cover-ups.

It's time the people woke up to this reality in all such pursuits in the PSU's, and demanded the eventual shutting down all of them. As long as they remain government-owned, there's no way of preventing political interference.

In the case of bus services, first and foremost, the demand needs to be for the opening up for competition from reputed private players (check this), under the overall oversight of the UMTA.

Muralidhar Rao

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