Sinha can do little else but frown at Paswan

Sinha can do little else but frown at Paswan
ENS ECONOMIC BUREAU

NEW DELHI, JUNE 8: Despite the Ministry of Finance distancing itself further today from Minister for Communications Ram Vilas Paswan's Rs 1,200-crore free-telephone dole, the basic proposal is certain to sail through but for a possible last-minute intervention by Prime Minister Atal Behari Vajpayee.

On Wednesday Yashwant Sinha had told The Indian Express group that he was against any kind of dole and today Finance Secretary Piyush Mankad got Paswan's ministry to issue a clarification that he was not part of the Telecom Commission which rubber-stamped Paswan's proposal a few days ago. The point, however, is that neither Sinha nor his ministry has any power to stop Paswan.

This is because the telecom department is fully empowered to take these decisions on its own, especially since there is no budgetary impact -- the telecom departments gather their revenue on their own. Usually, the finance ministry has a veto power of sorts only when they have to furnish the funds.

Interestingly, since the proposal doesn't concern other ministries, it may not have to go to the Cabinet either. Sources in the Ministry for Communications opposed to the proposal, however, argue that the Cabinet should take it up since customers will be hit. Since the waiting list for phone connections is quite large, giving free phones to 3.2 lakh department employees will ensure that customers will have to wait for a longer period now to get their phones.

While Paswan and his ministry have officially said the free phones would cost less than Rs 100 crore, the phones would actually cost Rs 800 crore to install and another Rs 400 crore annually, as The Indian Express had reported earlier.

Whether the matter is finally taken to the Cabinet will also depend on the value of the dole itself. If the Cabinet buys Paswan's line that the amount is just Rs 100 crore, there's no problem. If, however, it believes the cost would be in the region of Rs 1,200 crore, then the Cabinet could insist the subject be debated first.

The actual cost of installing a phone connection is around Rs 25,000 -- that takes the fixed cost of installing 3.2 lakh connections to Rs 800 crore. The normal earnings from a phone, if supplied to an average user, is Rs 10,000 a year -- that's another Rs 320 crore. Add to this the cost of the free calls that these employees will get, and that's another Rs 80 crore.