By Rajan S Mathews

Budget 2019 India: The Union Budget is a clear articulation of the government’s ambitions to bring India to the global forefront. It was expected the government may announce stimulus measures to boost economic growth, which has faced headwinds lately.

The telecom sector, which contributes 6% to GDP, has been reeling under acute financial crisis due to shrinking revenues and rising debt from past spectrum auctions. It was crucial the government announce some relief for the beleaguered industry, which is also battling high GST slab, spectrum cost burden and intense competition.

The sector has the right ingredients and potential to contribute as much as 12% to GDP, becoming a facilitator for economic growth. We believe the telecom sector is pivotal to drive the growth engine towards a $5-trillion economy, and it must be supported by a firm policy push.

Recently, telecom minister Ravi Shankar Prasad sought reduction in GST rate in the telecom sector from 18% to 12%. The minister also urged for a reduction of licence fees by 25%. Currently, telecom operators pay 8% licence fee of their adjusted gross revenue.

We believe high customs duty (20%) on telecom equipment and IGST (Integrated GST), especially on 4G and 5G network equipment, only serves to increase the cost for operations without doing much to develop locally-manufactured substitutes. But it was heartening to see the government announce clear directions to promote future technologies like AI and IoT, and also ways to bridge the urban-rural divide.

The finance minister announced speeding up assistance of the Universal Service Obligation Fund (USOF) under PPP for BharatNet with a target to connect every panchayat. BharatNet attempts to provide high-speed broadband connections to facilitate delivery of e-governance, e-health, e-education, e-banking, internet and other services to rural India. Putting this in the framework of a PPP is welcome. The project is being funded by the USOF, which was set up to improve telephony and internet connectivity in rural and remote parts. We would have liked to see a reduction of this levy from 5% to 3% to further incentivise the industry to promote rural connectivity.

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The proposal to give Aadhaar to NRIs who hold Indian passport without waiting for the mandatory 180-day period will attract more remittances. This will facilitate NRIs in getting mobile and banking KYC done quickly, and use the card for expediting financial transactions within the country.

The Budget announcements are largely in line with the government’s aim to make India 5G-ready by 2020. In the Economic Survey, it was highlighted that the government has earmarked areas where concrete actions will be taken to expedite the rollout of 5G services in India. We hope the government will provide the needed financial and other support to the industry, necessary to make this a reality.