The Government's acceptance of the conversion to equity of the moneys owed by Vodafone Idea of some Rs 16,000 crore making the government the largest shareholder in the company goes against its announced policy of privatisation and also the stated position that government should not be in 'business'. On the one hand, the government is selling off PSUs, including its jewel in the crown, LIC, while on the other hand, it is doling out Rs 16,000 crore to buy a stake in a private sector entity like Vodafone Idea which is in severe financial distress. There was no need to do that since if the telecom entity was to fold up due to its losses, then it would be the competition scenario playing out with the more efficient remaining in business. Again, Vodafone Idea seems to be under-capitalised and highly leveraged since the equity that the government is getting is above 30 per cent at Rs. 16,000 crore, while the company . has a debt in excess of Rs 1 lakh crore. There seems to be something fishy in this government 'business'. The Vodafone Idea management has said that the government is not interested in running the company, a statement which ideally should have come from the latter.
