Vantage point

Tuesday, February 21, 2006

More on ADC

A few weeks back I wrote about how the ADC which exists ostensibly to fund rural telephony is nothing but a sham.

Today's TOI has more.

Consumers have had to bear inflated tariffs of up to 18% to tot up this Rs 30,000 crore bounty which could easily fund the rollout of two nation-wide mobile networks at current costs. In comparison, actual results are gloomy: 98 of every 100 rural inhabitants still do not own phones and 66,000 villages in India are still to get their first phone.

Where is this money going then? Towards making BSNL and MTNL profitable of course, so that the non sequitir argument "we are profitable so don't privatise us" can be extended.

Rural connectivity remains abysmal. Babus keep running two companies which have conditions skewed in their favour. And who pays for all this?

While telecom companies now want the extra money collected through these levies to be returned to them with interest charges, the consumer, who has actually paid this amount,is unlikely to receive any compensation.

You and I pay for it. Now some of us may be OK with the idea of our money being used for welfare of sections of our country which are underprivileged. Even if I make my peace with this concept of being coerced to pay for someone else's welfare, how ridiculous is it that the supposed someone isn't benefiting at all.

Yet somehow a lot of people seem to think that just throwing more taxpayer's money into this whirlpool is the answer.

I am currently reading Sainath's 'Everybody Loves a Good Drought'. Will write a detailed review once I am through. But I am amazed at how despite traveling to the right places and making accurate observations, when it comes to proposing solutions, he almost always seems to be advocating throwing more money into the system.

For example, about the halthcare system, Sainath himself writes

We have built a health system for doctors, not patients. For contractors and pharmacists, not for the public.

In these two lines, he has summed up what is wrong with the entire state-run system in India. Our schools have been built for teachers and principals, not students. Our airlines were built for the AAI workers and not travelers. And our telecom sector too is built for the BSNL employees and not for the customers.

And yet, Sainath keeps talking about how under Manmohanomics, funding has been cut for the social sector. As if that is the main problem.

Another mistake that Sainath keeps making is he keeps talking of what I will call the "vultures". The quacks who benefit from the ramshackle health system. The teachers who benefit from the education system. All the opportunists who are feasting on the spoils. Sainath's rage seems directed towards these vultures.

And yet he seems to forget that vultures come to feast only after the death happens. A person's death can not be blamed on vultures. To save people from death, it is not the vultures who should be attacked. It is whatever caused the death in the first place.

In India, quacks, touts, and corrupt inefficient rentiers are all vultures. The disease is the statist setup which pays no heed to the customer or the beneficiary. Not because Indians are "inherently dishonest" as one blogger proclaimed. But because there are no incentives and disincentives for paying attention to the customer.

Where will you find customer being paid attention to the most? In a market!