Govt stake in Vodafone

Faced with the bleak prospect of roping in strategic investors or to raise funds, beleaguered Vodafone India had opted for the offer of the government to convert its interest obligations into equity.

As a result, the government will become the largest shareholder of the company with a stake of 35.8 per cent, with the shareholding of the Vodafone group and Aditya Birla group declining to 28.5 per cent and 17.8 per cent, respectively. It is quite ironical that the Centre, which often waxes eloquent about its commitment to divest its stakes in public sector undertakings, has now ended up with a stake in a private sector undertaking.

While the decision by Vodafone Idea to convert its interest obligations into equity may help address its cash flow woes, it has its task cut out when it comes to raising funds to acquire spectrum in the upcoming 5G auction.

M Jeyaram

Sholavandan, TN

Returns matter

‘Government ought not to be in the business of doing business’ is but a wishful aphorism. Globally, every government is active in business. The government of India does so when it auctions natural resources of the nation, disinvests its pubic sector units or invests in private industry.

The government’s proposed foray now into the equity of Vodafone, by design or default, is thus neither new nor is it compromised by its owning BSNL/MTNL in the same telecom sector. The key lies in ensuring targeted returns on investments.

That should only bring into sharper focus the need for top-notch autonomous regulators in any which sector, to constantly monitor aberrations in the government’s dual role in policy-making and ownership.

R Narayanan

Navi Mumbai

Focus on retail loans

This refers to ‘Banks must hit a ‘pause’ on retail loans’ (January12). In spite of banks being flush with liquidity, preferring retail loans over corporate loans indicates the excessive commercial mindset of banks. Though retail loans do play a part in augmenting consumption expenditure, it is wrong to assume that they are risk-free. The sub-prime crisis in the US is a stark reality to prove this fact. Increasing usage of technology, rise in income, less processing time, etc., could have contributed to the upward trend in retail loans.

On the flip side. rising processing/monitoring cost (in case outsourced), ambiguous documentation formalities, challenges faced in strictly adhering to eligibility criteria, increasing delinquency rates, etc., pose huge challenge to banks. Further, there is no proven system of risk-based analysis put in place by the RBI to check loan defaults; CIBIL score alone serves as the primary indicator. Hence banks need to tread cautiously before changing gear from corporate to retail loans.

Srinivasan Velamur


Booster for MSMEs

This refers to ‘Case for extension’ (January 12). Indeed, the Emergency Credit Line Guarantee Scheme is a boon to MSMEs at this juncture of the pandemic. The loans are meant to strengthen working capital requirements to meet operational liabilities and restart the pandemic-hit business of the MSMEs. Even though the credit off-take under ECLGS scheme is positive, difficulties are reported in getting the loans sanctioned. A balanced and timely disbursal of funds under the scheme with time extension beyond March 2022 will resurrect MSMEs, the backbone of industrial growth.

NR Nagarajan

Sivakasi, TN

Tackling air pollution

This is with reference to ‘Why India’s deadly air pollution keeps getting worse by the day’ (January 12). More than strict rules, educating people on the hazards of air pollution will work better. Without people’s co-operation and awareness, problems relating to air pollution cannot be solved.

With a good public transport system, people will hesitate to take out their private vehicles, which will not only reduce the road traffic but will also reduce pollution levels and save fuel.

Veena Shenoy