Do you wish to donate to BSNL etc....the Air India way?
In this issue:
» Diesel causes consumption of petroleum products to shoots up
» How accurate is the IIP number?
» Property market woes continue?
» What lies ahead for Indian IT?
» ...and more!
---------------------------- Yet Another Bailout... Speak out before it's too late! ---------------------------
When millions don't even have food to eat, our government is busy bailing out companies...
And this time, again, it's Air India.
This PSU gets a Rs 4,000 crore equity infusion... funded by the taxes we pay.
Not to mention the huge debt restructuring is basically a bailout in a different garb. And this runs into tens of thousands of crores.
Is this government really made up of our representatives or is it on the payroll of those corporate giants?
We at Equitymaster feel strongly about this cause, and thus have started an Urgent Poll where you can read all about this and cast your vote to make your voice be heard!
We strongly recommend every Indian, who wants to make a change, to take a look at this.
Click Here to read more and cast your Vote... Before it's too late!
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That's right. This is being done by using our tax money to bailout those companies that are going under thanks to the government's own ridiculous policies. The way this works is that first the government will come up with policies and regulations to milk the cash out of its rich companies. Over time these eventually lead the company to the point of bankruptcy. The government will then create a hue and cry to make it look like the entire country would be in doldrums if the PSU goes under and is not bailed out. This way it lays a foundation to ensure that a huge corpus of cash is allocated to bail the company out. Now naturally the huge corpus of cash comes out of the cash that has been collected through taxes. That is your and our hard earned money.
This is exactly what has happened in the case of Air India. The government has decided to bail out the ailing national carrier with an infusion of Rs 300 bn through equity and cash. It has also approved the restructuring of the Rs 180 bn of the company's debt. The company has been going through bad times due to increasing operating costs which it was unable to pass through due to increasing competition in the sector. And when the company was already in a bad shape, the aviation minister decided to go ahead and order expensive aircrafts, all funded by debt naturally. The additional interest burden sent the company deep in red. But obviously it had nothing to worry about. The government has decided to rescue it with our tax money
And this has just paved the path for more bailouts. There are several PSUs that are bleeding. The list is long and illustrious. For example, the national wireless companies Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL) have been in the red for quite some time.
But is this what we pay tax for? The answer is no. The money collected through tax is meant to fund public services for the benefit of the citizens of the country. This includes roads, water works, electric utilities, health services, etc. Not to bailout ailing companies.
Do you disagree with the government using your taxes for bailing out the PSUs? Share your views with us or you can also comment on Facebook page / Google+ page.
If you do then raise your voice by participating in our Ban Bailouts campaign
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Chart of the day | |
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Source: Business Standard
* For the period from April to February |
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02:25 |
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03:05 |
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The guidance is lower than the growth projections estimated by most of the industry experts. Does this indicate a painful year ahead for the IT sector? We do not believe so. Companies such as Tata Consultancy Services (TCS) and HCL Technologies have been growing well in the recent past. The managements of these companies have been optimistic about the healthy deal pipeline in the sector. If the global economic environment does not deteriorate further, we can expect a better performance from other large players in the ensuing quarters.
03:40 |
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The point to take home here is that economic slowdown currently is not just a supply side issue. Overall uncertainty in global markets and slowdown in demand have had an impact on even the fastest growing economies. In China's case, lower demand for exported goods from the US and EU may have hurt. For India, the domestic consumption and investment growth have lagged the historical trend. Thus it will require more than quick fix liquidity solutions to revive the economies from economic slump.
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04:55 |
Investing mantra |
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28 Responses to "Do you wish to donate to BSNL etc....the Air India way?"
Vivek Nayak
Apr 15, 2012The PSUs you have referred to are essential for the country's progress in terms of infrastructure,employment as also the development and sustenance of ancillary industries and a bail out may sometimes be necessary.It should be done on a case by case basis and on a short term basis.
sarat palat
Apr 15, 2012
The loss making PSU should be closed down. What sort of assurance we have that pumping additional capital to Air India will turn round the business ? Air India is an example. What about other loss making PSU's ? Just to safe guard the existing work force and take care of the vested interest of the politicians and senior management, the tax payers money should not be wasted.
DHAWAL AMAR SINGH
Apr 15, 2012Business is not the business of the Governments. The business of the Governments is justice, law and order, essential services, administration and maintenance of proper records. Putting Public Money to bail out Air India and then Politicians are controlling the management is suicidal. Let the professionals be allowed to run the Air Lines with responsibility to bring it to profit shall be the right long term approach.
Arun Draviam
Apr 14, 2012There cannot be jobs that are permanent, when the life itself is temporary. Where is the question of job-security for few lakh of employees, where millions are without any job. Remove the so-called 'job-security' through cadre services from governmental and public sector services. India will shine.
madhavankutty
Apr 14, 2012PSU s are called as Ram Bharvasa Hindu hotal it is run by government-see who is in the government- It is mixed with bureaucrats and maximum corrupted politicians with multiple parties. These all parties and for all personals want to swel their pocket. From where to bring the huge funds so they will find out the way to earn from the back door so it is not easy to make profit. All malayees will go through back door.See a simple thing in the past day while geting the telephone connection party to pay a Rs 3000,5000 even 10000+ some times where the money has gone
is they refund any interest of payment for the deposits
another thing if a telephone instrument is faulty they never replace with a new one they will bring another old one no use of any complaint and rental charges are high
the BSNL department may showing huge purchase amount. So no doubt PSUs will go on loss.
U K Gupta
Apr 14, 2012You are to some extent is right but before forming any opinion following may be kept in mind.
There may be inefficiency and lot of scope of improvement in PSUs. But earning does depend on way of working and honesty / code of operation which PSUs are bound to follow. Like in mentioned case of BSNL / MTNL, one has to look at the reach irrespective of profitability, activation certain services on chargeable basis without consent of subscriber, wrong billing etc. No wonder private players earning heavily and PSUs are in red.
Ashok
Apr 14, 2012Do you seriously think that any sane person will agree to the various bail-outs by GOI? But, our system has rendered us eunuchs, they know it and HENCE, they don't care about our opinions. In Gujarati, they have a saying - JENO RAJA VYAPARI, TENI PRAJA BHIKHARI, meaning if the King involves in business, the citizens will be poor.
Subhash Ravikanth S
Apr 14, 2012Excellent!!!
The intent of the artcile: "government has decided to rescue it with our tax money... But is this what we pay tax for?" is well conveyed. The views on wider question of what is correct, is aptly conveyed in comments above.
Supreme Court is already being questioned with clarifications request by President for meddling with execution decicions (2G)... Privite corporates cannot be trusted with Social welfare, due to profit motive... Professionalism at all points cannot be trusted to bring balance at all levels...People cannot be trusted to elect their best representative...Dictactor ship, Communism or Captialism have been repeatdly proven to fail to deliver results...
Since there is no one solution, I HASTEN TO CONCLUDE is the apt conculsion for keeping the candle light burning in strong winds...
Ragini Ghanekar
Apr 14, 2012Instead of bailing out PSUs government should find out a comprehensive plan to privatise these entities by selling to investors, Indian or foreign, who are willing to turn them around and extend help to these private investors in the form of legislation or otherwise. Government will have to find ways to protect interest of the employees of this bloated companies which could be main drain on them, as well as some social interest to be protected like servicing unprofitable routes.
Nagaraja
Apr 19, 2012unless Govt.sheds all PSUs , get proper infrastructure in place, better basic amenities in place- and avoid political farcial hand-outs for election purpose, get rid of archiac laws like draconian land acquisition act, remove corruption and corrupt officials/ politicians, NOTHING good will happen in this country.