Explained: Three reasons why a revival package for BSNL was cleared

Source: The post is based on the article “Explained: Three reasons why a revival package for BSNL was cleared” published in Indian Express on 28th July 2022.

What is the News?

The government has cleared Rs 1.64 lakh crore booster shot for state-owned loss-making telecom company Bharat Sanchar Nigam Ltd(BSNL).

What are the key aspects of BSNL’s revival package?

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Why has the government decided to infuse money into a loss-making company?

The move to further support BSNL and not monetise it like Air India is in deviation from the government’s laid down privatization policy. But the reasons to keep the BSNL afloat have its genesis in three main strategies of the government: 

One, with BSNL, the government is able to push forward with its rural broadband agenda. Nearly 36% of BSNL’s optical fiber customers are in rural areas and the operator assists the government in expanding to far-flung areas with low-income consumers for operations that are typically non-viable commercially.

Two, unlike private telecom operators, BSNL has had a heavy dependence on domestic component manufacturers — something that also helps foster a vendor base in the country.With BSNL launching 4G services and subsequently 5G, this will also take the domestic component industry along with it.

Lastly, the presence of BSNL’s network assets in border areas and left-wing extremism-affected areas means that the government considers it a strategically important company for it to be privatized.

Must read: Revival package for BSNL: Much needed bailout
What could be the impact of this revival package?

With these measures, the Centre expects that BSNL will be able to improve the quality of existing services, roll out 4G services, and become financially viable. 

It also expects that with the implementation of this revival plan, BSNL will turn around and earn a profit in 2026-27 (April-March).

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