4 problems with Modi Govt asset monetization

 If Govt is selling assets to private players should we be worried?

Yes, we should

Prima facie it looks like Govt is not giving up ownership, will give it to private companies on lease for money and take back control after stipulated period. But this model has lots of issues

1. Who will enforce quality?

Companies start collecting toll but won't fix potholes for years. Soon we pay for toll and also have to survive bad roads. Govt has got its share and doesn't have much interest in ensuring quality of service. Private payer has paid the Govt, wants his money back and isn't keen to invest more to give better services. So only general public will now pay road tax, tax on fuel and keep paying toll on every other road in the country because "govt wanted to monetize" its "assets".

2 No alternative to people. 

BSNL may not be a great company but it provided an alternative to price hungry airtel and vodafone. There were many villages where BSNL had great network. Air India isn't making profit but it is helping airfares stay in a limit. Similarly many public sector companies are serving some purposes and keeping ecosystem balanced. With these companies gone, pure profiteer-ism will run the industry. Eventually consumers will be made to cough up more.

3. Nothing will be returned on time.

 Ever seen any toll roads becoming toll free after stipulated 15-20 years? Toll operator is supposed to recover their spend within 15-20 years and then hand over the road back to Govt. But once blood is tasted, toll companies find reasons to keep extending toll tenure. Of course nice bribe does the trick. Same will happen to above assets- private players will continue to mint money beyond stipulated period under some excuse.

4. Eventually it will be me and you paying back. 

If an industrialist gets control of a road or railway or airport by paying thousands of crores to the government, they are not doing it for charity. They will have a plan how they can recover 2x from this investment before they have to give the asset back to the govt. In almost all cases, it will be the end consumers who will have to cough up.

Once Adani takes over airport, they will do some visible improvements and then increase passenger service fee, landing fee and various other fees airlines pay airport. If airlines are forced to pay more money to airport, naturally they increase the ticket price and pass the burden to passengers. Thus eventually me and you will pay more to fly and help airport owner make profit on his investment. I just need to be able to fly in and out cheap- i might not have asked for fancy airport that increases my ticket price by few thousand rupees. But Govt won't reveal all these and by the time public realizes the impact of what Govt has done, it will be too late.

Chennai airport may not have best of the services but flying out of Chennai is lot cheaper than Bengaluru and this used to matter to me. Modi Govt is now desparate for money. They tried to sell Air India- didn't work out, they tried disinvestment of many other PSUs- didn't happen, heavy tax on petroleum products is not providing enough, now trying to get some cash in the name of asset monetization. We have to see how it goes. Don't think investors are dumb to accept all the various rules Govt throws at them and cough up thousands of crores. They will bargain for terms that suit their interest and get their way. Eventually it is a loss for Indian public and taxpayers.