Facing resistance from the finance ministry, the department of telecommunications has finally decided to scrap a licence-fee waiver given to rural landline operators. The measure, unilaterally taken by telecom minister A Raja in July 2008, was implemented between October 2008 and March 2009. After that it was put on hold at the intervention of the Cabinet secretariat, which asked DoT to first seek a Cabinet approval for the waiver.
Interestingly, since then, while the waiver was revoked, DoT did not move a Cabinet note on the matter. It has now decided that since the finance ministry is against the waiver, as it involves an annual loss of Rs 1,400 crore to the exchequer, there?s no point pursuing it. Consequently, the telecom operators would now have to pay up around Rs 100 crore for the six months they enjoyed the waiver. The DoT is yet to decide whether an interest would be levied on the amount.
The finance ministry was always opposed to the move, but Raja had unilaterally gone ahead with the measure, which led the finance ministry to approach the Cabinet secretariat, citing breach of government of India (transaction of business) rules, 1961.
Another reason why DoT has decided to bury the matter is that a waiver would lead to arbitrage, tempting operators to shift revenue. Already the books of major private telecom operators are under scrutiny for ascertaining if they have diverted their revenue as income from other operations to forgo payment of licence fee.
Further, operators like BSNL, which is the largest provider of landline services, does not have a billing software by which its urban and rural revenues can be segregated.
Telecom service providers pay revenue share licence fee to the government between 6% and 10%, depending upon the circles. The operators also contribute 5% of their adjusted gross revenue to the USO fund, where around Rs 12,000 crore is lying unused. The DoT had provided the waiver to increase rural tele-density, arrest the decline in landline connections and give a fillip to broadband services. According to an internal DoT note, it would be better to provide such subsidy through the universal social obligation fund, which is meant for these purposes.