Memoranda for Submission to the Chief Ministers of the Two Telugu States.


Ministerial Interference in PSUs

Dt: 4/8/22

Ministerial Interference in  PSUs

Dr T H Chowdary*


In 1988-89  while I was the Chairman  and Managing Director  of  the VSNL  we wanted to replace  the Electro-Mechanical  International Gateway Telephone Exchanges in  Mumbai , Delhi and Chennai by  digital electronic exchanges of  the  latest  design.  Government  wanted us to  take   a loan from the  Asia  Development Bank  (ADB)  for this  purpose . We wrote specifications and invited global tenders as required by the Asian Development Bank stipulations.  When the bids were received I appointed an evaluation committee  in which I included a Dy. Dir General of the Development  of  Telecoms also  besides my own officers .  They evaluated the  bids and  came to the conclusion that  the best one was that of  Ericsson’s ( Sweden) . 


2. The  Japan was very much interested that   the MEC of that country  should  get this order.  While  the process was going on  I was invited by the  Japanese Counsel  in Mumbai for a lunch .   I accepted the invitation. During the  lunch and after  the Japanese Counsel   mentioned about the  MEC’s  bid for the  international  gateway exchanges. I said the  tenders were being evaluated and the right decision would be taken. 


3. The evaluation committee recommended that  the Ericsson’s  bid was the best.   Sweden is not a member of the  ADB. The ADB called for a meeting in Manila  to finalise the  loan for the international  gateway exchanges of India. There the  Japanese  officer  who was determined to challenge and revise the VSNL’s decision to  place the  order with  Ericsson. I did not go to the  meeting purposely . I sent   a Chief General Manager  of the VSNL Smt. Lakshmi Menon who was  a member of the  evaluation  committed and  a very competent  engineer .  In the deliberation of the ADB on this affair Lakshmi was put to  excruciating   questions . The discussion was postponed to the next day as Lakshmi  Menon  stood her ground she called me and told me that the Japanese official of the Bank was  becoming difficult  as he want her to concede that  MEC ‘s officer was better, “what should I do”, she asked me. I said, “since you and your committee were


convinced that Ericsson bid was the best  do you still hold that view” , I asked,  she affirmed . Then I said, “ come what may, loan or  no  loan,  hold your ground  and say that your Ericsson’s  bid was the best of all the bids  received”. She did so  and end of the next day’s decisions the   Japanese officer of the ADB congratulated her and   said  he would agree for the VSNL decision to obtain the Ericsson equipment.


4.  I dd not  seek any advise from  the DOT / Ministry of Communications.  We have taken the  decision to place the  order with Ericsson and issued the Letter of Intent.    Then a call came from the   Member  of the Telecom Board that the Minister  Sri Veerabhadra Singh  ( former Chief Minister of  UP ) and now  Minister for Communications  in GOI ) was inquiring about this tender and that I should  send  a report  to the Minister . I told him that the  VNSL has already decided  and  had issued the  Letter of  Indent with Ericsson, there was nothing more to be done and the order  will be placed with Ericsson.  The member was not happy but  just as  Smt. Lakshmi  Menon  stood her ground in Manila with the ADB, I told the Member that she could tell the Minister the order was placed and it is irrevocable .


5.  It is clear that Minister  would have wanted  to place the order  to some other company which would  approached him.   I am sure that  a few  persons like me who exercise the power without  obliging the  Minister as the Minister as well as the  DOT which is the demonstrative authority for VSNL. 


6. This is in fact, in the case of  BSNL obtaining new or additional equipment  for expansion of its mobile  network  a minister stood for the file for months on end   so that  the private companies to get the  market and the BSNL would be  a very late and lame  entrant into the  market.  To follow the dictates of the ministry or minister  defenders upon the  caliber of the CMD of the   PSU concerned.  Those who look for extension or who are –complicit with the minister would  jeopardize the interests of the PSU. This has been happening in the case of BSNL far too often.  That is why   it is   in the red. It can not be  saved.  It is better to  enlist state as a corporation and convert it back into a department .   ( 774 words)