FE Editorial : MTNL lessons for CIL

Written by The Financial Express | Updated: Jan 9 2013, 06:17am hrs
Irrelevant whether CIL does well if coal opened up

In the early 1990s, most Indians would have been concerned over the glacial pace at which state-owned MTNL and BSNL were providing land lines. And so, much like what the government is doing in the case of the state-owned Coal India Limited whose production is growing at an even slower pace, any move to professionalise the telecom PSUs would have been welcome. Today, both MTNL and BSNL are hugely in the red, but that hardly bothers any consumer since Indian telecom has moved on, and in a big way. After the government decided to open up telephony to the private sector in 1994, private telcos have even more rural telephone lines than BSNL does.

So while the government can try to gain time by saying it plans to hire a consultant to figure out how to restructure CIL, its not clear how this is going to help since the biggest problem CIL faces is its monopoly positioneven private sector firms, Hindustan Motors comes to mind immediately, have suffered the same fate of low productivity in the face of limited competition, and thats not even taking into account the inherent problems PSUs have in terms of lack of operational autonomy. In 1980, to take the example of iron ore, India had 11.5 billion tonnes of iron ore reserves and Australia 15 billion; in 2005, Indias reserves were 13.8 billion and Australia 40 billion. The difference is that Australia allows commercial mining, India doesnt. Eventually, the government needs to be clear about whether it wants to revive Coal India or whether it wants to revive the coal sector. It cant do the former without the latter.