CHAPTER- 1 1.1 Executive Summary
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CHAPTER- 1 1.1 Executive Summary:- India‟s economic development was greatly influenced by a series of negotiations and compromises between the followers of Nehruvian thought of state-led industrialization and Gandhian critics of technological modernization & urbanization. Gandhi was a firm supporter of Indian ethics of austerity based on the moral economy of the village, as a corrective to Western theories of modernization. In contrast, Nehru believed in a state-led development agenda that combined science and community in opposition to the inequalities inherent in Western industrialism. While the path to modernization was completely opposite for both, they were both fierce critics of Western modernity and instead envisioned a nation that could be „modern without coming under the Western influence‟ (Prakash, 1999: 231). The discourse of technology in postcolonial India revolved around Gandhi‟s vision of swaraj (self rule/self-dependency) and Nehru‟s vision of collective interests before individual profit. In contrast to Nehru‟s version of Fabian socialism, this saw in the Russian Revolution a model of technology-led development and progress, Gandhi emphasized manual work and a moral economy of Indian village life (Khilnani, 1997; Pantham, 1995). Like many other postcolonial nations, India followed an import substitution industrialization model of state-led capitalism. Throughout the 1950s & 1970s public sector investment were massive in large dam projects, steel mills and other „temples of the future‟. For a sector like telecom, the outcome of the competing Nehruvian and Gandhian visions was a combination of centralized state ownership coupled with long-term political neglect of everyday operations, thus it remained in the back burner of development for decades. The Indian telecom network came to birth in 1850‟s when India was still communicating through the post. It is one of the oldest in the world and played an integral role, along with the railroads, in reinforcing colonial control over a vast territory. For almost four long decades telecom services remained below the 1% mark in terms of tele-density; primary reason being political & social. For a nation where the vast majority of citizens live in poverty in rural areas, social policy dictated that public expenditure prioritize other infrastructure areas – such as roads and power, as well as social services like sanitation, education and health – over expanding telecom, which received only 2–3 percent of the total national budget allocation. One of the prime objectives of state-led development was that public industry should balance economic development with social equity. Since telecom services were interpreted as a luxury, balanced development did not lead to expansion of telephony. Instead, the government focused on the production end through attempts at technological self-reliance, encouraging regional development by setting up manufacturing plants of telecom in economically backward areas. With the rise of Nehru‟s daughter to power in the late 1960‟s, Indira Gandhi brought in new limitations on foreign equity of firms & restrictions on imported technology & investments. While certain measures were taken to boost the telecom industry from time to time, (for example, in 1953, the introduction of the telex services in Mumbai and in 1960 the commissioning of the first Subscriber trunk dialing route between Delhi and Kanpur and 1 between Lucknow and Kanpur), the first waves of change were set going by Sam Pitroda in the eighties. Chakravartty in his article said that the Indian government then was composed of many fragments (parties) which had different viewpoints. The centrists wanted the telecom market to be open to competition ground of foreign as well as Indian companies while others wished for a government-regulated sector without any role of foreign competitors. Owing to the conflicts it was a tough task to liberalize Indian telecommunications early. In the words of Greene & William, by the late 1980‟s India‟s recurring fiscal deficits & negative balance of payments encouraging the Indian government to bring in Liberalization Privatization & Globalization (LPG) into the country. Liberalization finally entered in 1991 in the nation with P. V. Narasimha Rao as the Prime Minister & Dr. Manmohan Singh as the finance minister. Post 1990‟s saw the government of India discarding the highly regulated old monopoly-market concept & shifting to a moderately competitive fairly deregulated open-market policy regime. Prior to LPG certain measures like allowing Alcatel CIT of France to partner with the state owned Telecom Company (ITI), so as to encourage 5,000,000 lines per year. Due to political opposition the policy failed. Bringing in Sam Pitroda, a US based Non-resident Indian NRI to set up a Center for Development of Telematics (C-DOT), were taken previously but this measure too drastically failed due to political opposition. Later many public sector organizations were set up like the Department of Telecommunications (DoT), VSNL and MTNL & numerous technological developments took place in this regime but still foreign players were not allowed to participate in the telecommunications business. The real transformation in scenario came with the announcement of the National Telecom Policy in 1994. Telecom services with the Department of Post and Telecom (P&T), responsible to the Ministry of Communications was a hierarchical structure. Within the constraints of a limited budget, a centralized bureaucratic board determined policy guidelines, technology standards and implemented expansion of the network at a modest pace. From the viewpoint of these bureaucrats, the state served the public interest by keeping local service and rental rates well below world standards and by using profits from telecom services to compensate the operations of the labour-intensive postal sector, which was seen as a more basic development priority. With the overall telecom network expanding slowly, barely doubling the telephone density from the colonial era in 40 years, the bureaucracy grew extensively. The expansion – which accounted for one of the highest worker-per-telephone-line rates in the world – can be explained by another important feature of the social equity policy: the provision of employment opportunities for marginalized castes or socially backward castes, religious minorities and tribal groups. It was a dark time in 2009 when the world was going through a recession. Amidst the contagious economic meltdown across the globe & in India, our telecommunications industry proved to be a silver lining in the darkness. With a total subscriber base of 846.32 million the Indian teledensity now stands at 77.6%. The tele-density saw a huge rise from 51% in 2007. In the first quarter of 2011 the additions to the mobile subscriber was about 17-18 million but in March 2011 the figure crossed 20.2 million. 2 1.2 Introduction Try to imagine a day when your cell phone has been sent on repair or a landline dead at home or a massive disruption in the internet facility in office. Spending 24 hours would be like spending a long year in dark. It would remind me of the 1840‟s when India was still using the slow postal service as a means of communications. It all started with one experimental electric telegraph line from Kolkata to Diamond Harbour that was first open to use for the British East India Company. One & a half centuries from then, today our world has become much faster with mails reaching in less than a minute, mobile phone turning into a gadget of necessity with message rates cheaper than never before with the introduction of the one paisa per second plan for customers who wanted to make the most out of every paisa spent on communication. With all the ups & downs of political neglect & social evils that this sector faced over decades, today it has become one of the fastest growing industries after China & undoubtedly a hot spot for foreign players in an emerging market like India. The Indian telecommunication sector is more than 165 years old. For decades this sector was highly government regulated sector & had monopoly form of competition. Its subscriber base of 846.32 million by March 2011 & an overall tele density of approximately 77% the Indian Telecommunication Sector is the second largest network in the world. Once regarded as a luxury, today it is seen as a necessity in the modern world of trade, economics, banking, hospitality, manufacturing & also agriculture. The success of almost all other industries is heavily dependent upon the successful working of our telecommunications. As per Cellular Operations Association of India the telecom sector is the life & bread for one crore people & it is said that by 2012 additional 28 lakh direct jobs & 70 indirect jobs will be created. The rising telecom industry directly accounts for 1.5% of India‟s GDP as of 2009 data & India has earned a name of charging the least for calls in the world as per a study by Cybermedia India Online Limited (CIOL). Linking Line: Chapter 1 containing the abstract & introduction to the case reveals a brief journey of the Indian telecommunications sector from its birth in 1850‟s up till now. Following chapter will give an insight into the literatures we have gone through for further analysis in this case. CHAPTER 2 3 2.1 Literature on Telecom, national development and the Indian state: a postcolonial critique. University of Massachusetts, Amherst USA: Paula Chakravartty 2.2 Literature on Telecom Policy Reform in India: Harsha Vardhana Singh, Anita Soni and Rajat Kathuria 2.3 Business Monitor International. (2011). India Telecommunications Report Q1 2012. London. United Kingdom 2.4 Business Monitor International. (2010). India Telecommunications Report Q3 2010. London. United Kingdom 2.5 Corporate Catalyst Report. (2007). A Report on Indian Telecom Industry. New Delhi. India 2.6 Literature by Vodafone Public Policy Series. (2009). India: The Impact of Mobile Phones. (Pub. No.978-0-9552578-5-8).