Policy flip-flop: Muddled approach mars policy-making, reform narrative

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Published: February 2, 2019 2:53:40 AM

The one area where the government did take a concrete step was with regard to the aviation sector where it did away with the 5/20 policy

After assuming charge in May 2014 among the many promises the BJP-led NDA government made was the one related to turning around the loss-making public sector undertakings.

After assuming charge in May 2014 among the many promises the BJP-led NDA government made was the one related to turning around the loss-making public sector undertakings. Contrary to the expectation in several quarters that the government should privatise the loss-making PSUs, its approach was that instead of going for any such step it would instead turn them around. The example of Narendra Modi’s tenure as chief minister of Gujarat was given where he had turned around several state-government run PSUs.

Among the first Central minister to push this line was the then then telecom minister Ravi Shankar Prasad. When asked how he planned to tackle the loss-making telecom PSUs like BSNL and MTNL, Prasad had said that he would turn them around and cited his own case as a coal minister in the Vajpayee government when he had turned around the loss-making Coal India.

However, as the government is veering towards completion of its five year term, its record on either privatising or turning around the PSUs isn’t satisfactory by any account. Not only the PSUs, the policy approach towards several other aspects like reforming the retail sector by having a regulatory body to check predatory pricing, or having a flat corporate tax of 25% as promised in its budget of early years, to bringing about a new telecom policy which could check the growing sickness in the telecom sector, the approach hasn’t been of clear thinking.

The one area where the government did take a concrete step was with regard to the aviation sector where it did away with the 5/20 policy by removing the mandatory completion of five years of operations by an airline, apart from having 20 aircraft before it could apply for permission to fly on overseas routes. The new policy only required airlines to have a minimum fleet of 20 aircraft. However, this is also not complete as the first application made under this changed policy for overseas flight by Vistara Airlines has been pending with the civil aviation ministry now for more than six months.

While nothing concrete was ever done in policy terms for turning around BSNL and MTNL and both continue to post losses with stagnant revenues, a step was taken in the case of Air India to privatise it with government willing to divest 76% of its stake. But the move did not elicit any bids by the private parties as everybody felt that with the government retaining 24% running of the airline on pure professional terms would not be possible. The privatisation of Air India thus has been postponed once the general elections are over and a new government takes charge.

In the e-tail sector instead of bringing about some form of a regulatory body to check predatory pricing to address the grievances of a section of the trading community, the government towards the fag end of its tenure dealt a severe blow to the sector by coming out with a policy which struck at the very roots of operations of e-tail firms.

The new policy stated that marketplace based e-commerce companies having FDI cannot allow those sellers to sell on its products where the e-commerce firm has a stake. The most surprising thing was that this change in policy was notified without any consultative process with the stakeholders.

In short, similar patterns are found across most sectors which lack a well though out approach towards policy formulation.

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