End Taxpayers' Handouts To The Telecom Operators

Never thought I would agree with anything Varun Gandhi said or wrote.  When he forgets about chopping off hands and all that, he seems to make sense.  Pull the plug on diesel subsidy.

As diesel prices are subsidised by around 21 per cent, the telecommunication sector is able to purchase diesel at a very low price for its operations. This is causing the country's exchequer a massive annual loss of more than Rs 2,600 crore, whereas the Telecom Industry is witnessing a growth of profits by 10 per cent per annum.

This makes sense too: 

At the same time, the government should also introduce appropriate incentives to encourage the telecom sector to use renewable energy for generation of power for their network infrastructure. For this, the Ministry of New and Renewable Energy also needs to review its policies.

In any case, we the taxpayers are subsidising the telecom operators' profits.  Let us at least do it for the right reason. 

Relatedly, Green energy to be made mandatory for powering cell towers:

India has around 3.5 lakh telecom towers of which about 70 per cent are in rural areas. At present, 40 per cent power requirements are met by grid electricity and 60 per cent by diesel generators.

The diesel generators are of 10-15 KVA capacity and consume about 2 litres of diesel an hour and produce 2.63 kg of CO2 a litre, according to the Telecom Regulatory Authority of India. The total consumption is 2 billion litres of diesel and 5.3 million litres of CO2 is produced. For every KWH of grid electricity consumed, 0.84 kg of CO2 is emitted.

Airline Woes

Airlines hit turbulence:

The ATF prices are very high in India because states levy sales tax or VAT on ATF between 23 to 35 per cent. Being a state subject for tax, the Centre cannot control ATF prices or make them uniform. Airlines complain that ATF prices in India are almost double than that of global rates and account for 40 to 45 per cent of operational expenses compared to 18 to 20 per cent abroad. In fact, compared to a country like Singapore, ATF prices in some states in India is almost 70 per cent higher, they say. Another factor that drives costs up is high salaries for pilots and crew members. Though, after the recession in 2009, salaries did not move up rapidly, wage cost for airlines is still very high.

How about salaries?  Do these airlines pay as much as airlines in other countries?  I think not.  And what about all those sweet loans from obliging PSU banks?  SBI for instance has the highest exposure to Kingfisher - about Rs 1,400 crores (SBI asks Kingfisher to raise fresh equity before debt recast).

Or maybe the problem is elsewhere?

Yet another reason cited for the losses is the overcapacity in the sky. In the last one year or so, airlines leased more aircraft, added many more seats, opened new routes and increased frequency in the metro routes. The net result was that with more seats on offer and dynamic online pricing system, yield per seat nosedived. Points out SpiceJet spokesperson: “The pricing environment continued to be weak, resulting in a decline in the average passenger yields in the September quarter by 5 per cent to Rs 3,317.” He says that with increased capacities getting inducted, load factor during the quarter was also down to 67 per cent from 74 per cent during the same period last year. With the creation of large capacity, airlines are finding it difficult to reach a breakeven load factor which itself has moved up because of higher fuel cost.

Too crowded

It is also true that the herd mentality of Indian business has made many to join the fashionable high flying club without much planning. As everyone thought that by driving volume one can make money, they kept on adding new planes. Though all airlines are flying more flights with the low cost carriers (LCCs) configuration to cut costs, it did not help much as the fixed costs for fuel, interest payments, depreciation and maintenance and so on, constitute 90 per cent of the total cost.

More from Business Line: The rise and fall of a castle in the air.  Glamour.  Huh.

Polluter Pays? Hardly.

From The Hindu:

He pointed out that in the wake of the Bhopal gas disaster when many affected people and voluntary organisations approached the court of law, the government woke up to the situation and at the intervention of the courts, tried to enforce measures for the treatment of effluents before discharging them in the public places.

But under pressure from the industries, the “polluter pays” theory was given the go-by and in most of the cases the industrial units discharging pollutants were made to pay only 20 per cent of the cost with the remaining 80 per cent coming from the general tax payers, the State and Central government funds and the financial institutions.

The industrial houses did not even bother to maintain the treatment plants or expand its capacity when the load increased. The GPCB kept on issuing notices, but no one ever bothered about violation of its norms and the Board remained a silent spectator doing nothing to make the industrial houses bend.

Pollution by industry is a hidden subsidy to the polluting industries. Do they really pass on this subsidy to consumers - may be, may be not. Of course, this is not specific to India:

In the last five years alone, chemical factories, manufacturing plants and other workplaces have violated water pollution laws more than half a million times. The violations range from failing to report emissions to dumping toxins at concentrations regulators say might contribute to cancer, birth defects and other illnesses.

However, the vast majority of those polluters have escaped punishment.

[The NY Times ]research shows that an estimated one in 10 Americans have been exposed to drinking water that contains dangerous chemicals or fails to meet a federal health benchmark in other ways.

... stretched resources [at the regulators] are only part of the reason polluters escape punishment. The Times’s investigation shows that in West Virginia and other states, powerful industries have often successfully lobbied to undermine effective regulation.