Tag: psus

Penny wise pound foolish at PSUs

A couple of months back, an uncle who works for a PSU in a reasonably senior engineering role, had to go to Calcutta on work. Thanks to his late arrival from Calcutta, we had to postpone a party that had been planned for a weekend. When I asked about his late arrival, I was told that his train had been delayed. It was then that it struck me – that a lot of PSU officers still do business trips by train!

The logic completely defies me. An airconditioned train ticket (at my uncle’s grade, I don’t think they would send him by cattle class) from Bangalore to Calcutta costs around Rs. 2000, and it takes about thirty six hours. A flight, on the other hand, costs not more than Rs. 7000 (assuming you’re not booking at the last minute), and takes about three hours. What amazes me is that the PSU that employs my uncle values his time at less than (7000-2000)/(36-3)  ~= Rs. 150 per hour! Ok even if you assume that the train journey had two nights when he would have been unproductive (and assuming that he’s a superman and so doesn’t need to rest and recover from a long journey), his employer values his one full day of work at Rs. 5000!

While this valuation might be consistent with my uncle’s salary (I’m only guessing given his experience and position; I haven’t asked), I think it’s still a stupid choice to make on behalf of the PSU. I was reading an op-ed by Mihir S Sharma in this morning’s Business Standard, where he talks about our warped sense of “austerity”, and was wondering if this decision to send my uncle to Calcutta by train was a measure in a similar direction!

Austerity means cutting down or limiting wasteful expenditure. It does NOT mean cutting down tangible expenditure in favour of the intangible (my uncle’s lost working time is an intangible, since he gets paid monthly; so is his reduced efficiency on the day immediately after his journey). Unfortunately some of the PSUs have not recognized this and still stick to some age-old “policies” regarding travel and expenditures.

My wife, who works for Toyota, informs me that a certain number of cars produced every day are “specially made for the government”. When I ask her what is so special about a sarkari car (apart from that rhino-horn like thing on the bonnet) she tells me that they are not supposed to have air conditioning! Given that air conditioning is a default in most cars nowadays, this “no air conditioning” is a special request that the government has to make to the manufacturers, so I don’t think it makes any tangible difference in the cost of the car. From my experience with my Zen, driving with and without air conditioning (I live in Bangalore, so I don’t need it at all times), I know that air conditioning hardly makes much of a difference to the mileage of the car. So overall in terms of cost, there is little the government saves by not having air conditioning in the car.

Now think of the babu in Delhi, where summer temperatures go well into the forties, and which is so dusty at all times of the year. Think of the possible increase in his efficiency if he were to travel in an air conditioned car. That is an intangible and the government will have none of it. It is all about austerity, you know. Penny wise, pound foolish.

PS: The recent focus on corruption has done more harm than good. Afraid of “being pulled up” by the CAG or any similar authority, a number of PSUs have gone into policy paralysis, and are simply not taking decisions, lest they are accused of being corrupt. The economic loss (again intangible) is humongous compared to the amounts these people might have possible swindled had they made the decisions! We never learn.

Site Allotment

In Bangalore, you have two kinds of residential layouts, BDA Layouts and Revenue Layouts. The former are layouts that have been created by the Bangalore Development Authority (BDA) or its predecessor the City Improvement Trust Board (CITB). These agencies acquired land from villages which were then on the outskirts of Bangalore, planned layouts with sites of different sizes, roads, “civic amenity sites”, etc. and then “allotted” them to applicants based on certain criteria.

To get a site allotted, you had to declare that you didn’t own a house in Bangalore, pay an upfront amount and wait for a few years before you would get your plot at a fairly subsidized amount in what was then the outskirts of the city. There were also layouts that were created and allotted to different PSUs. For example, you have ISRO Layout near Banashankari where sites were allotted at low prices to employees of ISRO. Similarly there are several “bank colonies” all over Bangalore. These sites were again allotted at subsidized rates. The government would acquire land from villagers, pass it on to the PSU employee association who would then allot them to employees. Interestingly, the resultant sale deed would be between the original owner of the land (typically a farmer) and the employee. The government and PSU’s name would be absent.

Revenue layouts did not have a government middleman. Original owners of the land (typically farmers) would cut it up into plots, allot area for roads and sell it directly to people to build houses there. Initially these areas would be deemed “illegal” thanks to their violation of zoning laws. In due course of time, they would get “recognized” by the BDA or BBMP and then BWSSB would provide water supply and drainage (till then people would rely on borewells and septic tanks).

If you drive a few kilometers out of Bangalore, especially in the eastern direction, you are likely to see a few mini Gurgaons. There has been absolutely no planning here, and so you have skyscrapers (either apartments or office complexes) interspersed with vast tracts of empty land. It is a sprawl out there, and there is no way one can live in these parts without a car. The vast empty spaces also mean these areas are ripe for criminal activity, and the buildings usually have private sources for their public goods (such as water or drainage).

While this makes a case for planned urban development (with its associated “site allotments”), there is also the issue of corruption. If you look at some of the corruption cases that have been filed recently against Karnataka politicians and bureaucrats, you will notice that they mostly have to do with land use and site allotments. Yeddyurappa went to jail in a “land denotification” case – that corrupt act was made possible because the government controls zoning. Former Lok Ayukta Shivaraj Patil had to resign because he got allotted a site when he already owned a house in the city.

So on one hand you get well planned and manageable cities, but significant scope for corruption and rent seeking. On the other, you have chaos and unplanned development, and several mini Gurgaons rather than proper cities. It seems like we have a no-win situation here. How do we handle it?

PS: I know that revenue layouts also involve heavy corruption, in terms of “regularising” or changing land use. However, surprisingly given the amounts involved, this kind of corruption seems to have remained at the lower levels of bureaucracy