Have honey, will get bees. Nothing exemplifies this better than the Universal Service Obligation Fund (USOF), initially set up to help spread rural telephony. Each telecom company has to contribute a whopping 5% of revenues towards the fund which, in turn, is supposed to use the money to, for instance, defray costs of supplying telecom services in rural areas.
The fund, however, has been so bureaucratic, firms have spread their rural networks without accessing it. As a result, while rural telephony has grown by leaps and bounds—every second rural household, the 2011 Census shows, has a mobile phone—so has the USO Fund, currently around R28,000 crore. Given this, you’d expect the government would consider winding it up and, in the bargain, help the cash-strapped telcos as well. But that would be too simple. Much better, the babus and politicians agree, to let the fund continue and use the honeypot to fund populist programmes. While one was to give out free mobile phones to rural folk—it is a scheme for rural India!—the latest proposal is to also give out tablets for students in Class XI and XII. It’s also so elegant: The government would gain popularity, or so it believes, by giving out freebies and this will be budget-neutral. It’s a bit like the oil subsidies that are mostly funded by the oil PSUs—ONGC and IOC get to bleed and while a grateful citizenry thanks the government for giving it cheaper diesel and kerosene, the government still gets to stay within its fiscal red line.