State largesse could drive further expansion of India?s celebrated mobile telephony industry, with the government planning to spend Rs 10,000 crore over the next five years under an ambitious programme to provide free handsets and talk time to BPL families.
The move comes at a time when the country has crossed 525 million mobile connections, and requires stronger rural demand to keep up the growth momentum.
However, the proposal has set off a tug-of-war between officials in the department of telecommunications (DoT). Believed to have been mooted with the backing of communications & IT minister A Raja, the plan envisages bankrolling the programme with the Rs 12,000 crore lying unused in the universal service obligation (USO) fund.
Sources said though DoT mooted the proposal, USO fund administrator Ajay Bhattacharya has opposed it, saying it does not make business sense. He is of the view that the funds would be better utilised on well conceived rural telecom projects rather than on doling out handsets, which are sure to be then sold in the second-hand market.
The USO fund is meant for telecom projects in rural areas to widen pene-tration. All operators contribute 5% of their adjusted gross revenue towards the fund. Bhattacharya confirmed the DoT plan, telling FE, ?Yes, this is one of the proposals. But no final decision has yet been taken.?
Officials siding with Bhattacharya described the proposal as ?bizarre?, adding that it was full of loopholes. For instance, under the scheme, BPL families would be provided vouchers, which can be redeemed for handsets bundled with talk time.