Privatization of government ... Government of privatization

Air India, privatization of Bharat Petroleum, on the other hand the government will be the largest shareholder in Vodafone Idea

Vodafone Idea to give 36 per cent stake to government instead of paying AGR interest: Tata Tally to get 9.5 per cent stake

The central government has taken ownership of three companies that have sunk under the huge debt burden of the telecom sector

AHMEDABAD: The Indian government is in the process of reducing its role in trade and industry by bringing privatization aside. Accordingly, the public issue in the Life Insurance Corporation, the state-owned airline Air India is again being handed over to a private corporate and is selling its entire stake in Bharat Petroleum.

The government was hit hard in the privatization process on Tuesday when the country's leading telecom company, Vodafone Idea, announced that it would provide equity instead of debt.

Vodafone Idea has decided to pay 35.8 per cent stake in the Rs 16,000 crore company instead of paying interest on the remaining four years of adjusted gross revenue (AGR). With this decision, the government will now become the largest shareholder in Vodafone Idea. In addition, Tata Tele Maharashtra has also announced a 9.5 per cent stake in the government.

As part of the Self-Reliance India package, the central government has decided in principle that the central government will strategically privatize it by selling it strategically to companies other than those industries and companies required only for the security of the country or in the public interest.

To this end, the privatization process of 15 companies including Air India, Shipping Corporation of India, Bharat Petroleum, Container Corporation, Rashtriya Ispat, IDBI Bank and Bharat Earth Movers has been started in 2021-22. As a result, Air India has been sold to the Tata Group for Rs 18,000 crore.

On the other hand, Vodafone Idea, the country's third largest mobile service provider, today announced a share allotment of Rs 10 crore to the government instead of paying Rs 16,000 crore in interest on its four-year government outstanding AGR.

Vodafone Idea is a private company owned by Vodafone UK and Aditya Birla Group of India. With the acquisition, the government will now have a 35.8 per cent stake in Vodafone Idea, more than the owner Vodafone (28.5 per cent) and the Aditya Birla Group (17.8 per cent). So now Vodafone Idea will become a government company.

Vodafone Idea, which is burdened with huge debts, will now have three state-owned telecom companies coming to the government. All three are making losses and have huge debts on their heads. The Central Government currently has two telecom companies, Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telecom Limited (MTNL). Both are suffering huge losses.

In the financial year 2020-21, BSNL had a loss of Rs 7,441 crore while MTNL recorded a loss of Rs 2554 crore. BSNL has a debt of Rs 81,156 crore at the end of FY2021 and MTNL has a debt of Rs 29,391 crore.

At one stage, Vodafone Idea, the country's largest telecom company, is facing huge losses after the Supreme Court ruling in the AGR case, but its customers are also declining.

In the financial year 2020-21, Vodafone posted a huge loss of Rs 7,132 crore. Vodafone Idea currently has a debt of Rs 1.94 lakh crore, including Rs 1.08 lakh crore to the government on spectrum, Rs 63,400 crore on AGR and Rs 22,770 crore from banks.

Meanwhile, Tata Group, the country's largest industrial conglomerate, set a prime example in the process of privatization of state-owned airline Air India for Rs 18,000 crore. Reported the decision.

Birla was ready to give his full share to the government

In August 2021, Kumar Mangal Birla, chairman of the Aditya Birla Group, wrote a letter to the Union Cabinet Secretary asking him to hand over all his stake to the government or any company he wants to keep the company afloat and serve 270 million customers. He wrote this because there was no cash available for huge debts and debt repayment and even new investment was not possible in this situation.

The stock crashed 21 percent

Shares of Vodafone-Idea plunged 21 per cent on Tuesday after reports of debt conversion into equity. Shares of the company fell nearly 21 per cent to Rs. Was born 11.50. Finally, at the close of trading, the company's stock plunged 20.5 per cent to Rs. 11.80 closed. The stock closed at Rs. Was 14.85.

How to get a stake

For the arrears of AGR, the government has given a moratorium in the principal amount including interest on recovery for four years. Vodafone Idea and Tata Tally Maharashtra have announced the issuance of preference shares. This preference share will be allotted to the government after the calculation of interest is approved by the Department of Telecom.

What is AGR?

After nearly 11 years of legal battles, the Supreme Court ruled in October 2019 that the Department of Telecom's AGR definition for calculating spectrum fees should include calculating what a telecom licensed company has sold other than mobile service and paying interest to the government. Due to the huge amount, the government announced a package to pay the telecom companies.

The government's approach to trade and industry should be pragmatic

A sensitive approach should be adopted for industries that are creating jobs in the country, serving millions of customers and providing economically important products or services. The central government should take appropriate steps to support strategically important industries, even if they are private companies, by selling profitable companies and bringing in new investors to reduce their debt.

In the past, the government has invested in the steel industry, the coal industry or the cement sector, or to save government banks from time to time, or to capitalize on them. The steel and coal industry in Britain is a prime example of how the US has helped the automobiles and the banking sector.

Just as the government considers the country's economic progress and employment to build loss-making state-owned companies, so too should private companies help if they are in trouble. In such a case economists or experts should refrain from any kind of comment or criticism. At a time when the world is moving away from both democracy and communism, decisions must be made in the public interest.