Dropping below target! Modi govt’s revenue from telecom to take a hit

By: and |
New Delhi | Updated: January 10, 2018 6:35:00 AM

The absence of an auction for spectrum and lower collection of licence fee and spectrum usage charge (SUC) from operators in the wake of lower revenue due to competitive pressure from Reliance Jio will see the government’s revenue for FY18 from telecom services fall 33% from the budgeted level to Rs 29,524 crore.

telecom sector revenue, drop in telecom sector revenue, government's revenue from telecom sectorThe Budget estimate was fixed at Rs 44,342 crore, which itself was lower by 55% from the Budget target of Rs 98,995 crore for FY17. (Reuters)

The absence of an auction for spectrum and lower collection of licence fee and spectrum usage charge (SUC) from operators in the wake of lower revenue due to competitive pressure from Reliance Jio will see the government’s revenue for FY18 from telecom services fall 33% from the budgeted level to Rs 29,524 crore. The Budget estimate was fixed at Rs 44,342 crore, which itself was lower by 55% from the Budget target of Rs 98,995 crore for FY17. The government’s actual collection in FY17 was finally lower at Rs 78,715 crore. Sources in the department of telecommunications (DoT) said that they have already intimated finance ministry officials about the fall in the targeted collections. Officials said that the lower target of Rs 44,342 crore was fixed in the Budget in FY18 as there was no spectrum auction planned this fiscal. However, even this target needs downward revision because there’s a major shortfall expected during the year in licence fee and SUC which form the bulk of revenue from telecom services. For instance, in FY17 the actual collection from licence fee and SUC stood at Rs 22,491 crore and the Budget target for FY18 was fixed at Rs 31,942 crore. However, the commercial launch of Reliance Jio forced incumbent operators to drastically lower their voice and data charges, which has taken a toll on their payment of licence fee and SUC. Operators pay 8% of their adjusted gross revenue as licence fee and 5% as SUC.

The DoT has told the finance ministry that against the target of Rs 31,942 crore from licence fee and SUC the actual collection will be around Rs 14,311 crore. Add to it another Rs 12,000 crore from deferred payment instalment and another around Rs 3,200 crore that comes from receipts like contribution towards pension, interest receipts, etc, and the final number will be around Rs 29,524 crore. Officials said that the likely target from telecom services for the FY19 Budget is likely to be fixed lower at Rs 35,000 crore as an auction has not been factored in so far.

Apart from lower receipts from telecom services, lower dividend from the Reserve Bank of India have pulled down the government’s non-tax revenue in the first eight months of FY18. In April-November 2017, non-tax receipts stood at Rs 1.05 lakh crore, or 37% of the Budget target of Rs 2.89 lakh crore compared with Rs 1.74 lakh crore or 54% of the FY17 budget of Rs 3.23 lakh crore in the year-ago period. Concerns remain on the tax revenue front as well due to the goods and service tax’s transitional problems. The Centre has decided to borrow Rs 50,000 crore more this year to meet expenditure commitments.

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