The respite will also benefit consumers by ensuring continuity of service to subscribers, and will prevent a hike in voice and data tariffs.
Can the government waive off the interest, penalty and reconsider the principal amount of AGR? The answer, is a resounding “Yes”. The government can do this by making an amendment to the license agreement definition of AGR, which applies retrospectively.
If the Indian government plans to stand behind its players, it will send out a positive signal and give an impetus to the industry. This won’t be a diversion from its earlier stance. In the past, the government has taken steps prioritising broader public interest over revenue maximisation. The most significant is the National Telecom Policy, 1999. By allowing migration, it saved the industry from an imminent collapse, which would also have resulted in government being tied up in multiple litigations.
Trai, on several occassions (viz January 2015), has suggested exclusion of revenue from operations other than telecom activities and “other income” for determination of AGR. DoT also recommended AGR review in the National Digital Communications Policy, 2018 (NDCP).
On several occasions, the government has made policies that have had an economic cost on the public. The finance ministry, last year, levied safeguard duty on imported solar cells even though it led to an increase in tariffs. The duty was imposed to prevent erosion of the domestic industry.
In fact, the government has on other occasions even gone a step further, and amended the legislation to have a retrospective operation. This position was established in Ujagar Prints Vs Union of India, where the court opined “A competent legislature can always validate a law which has been declared by courts to be invalid, provided the infirmities and vitiating infractors notices in the declaratory judgment are removed or cured. Such a validating law can even be made retrospective….”
The telcos have been crucial in proliferation of telecom services and improving access to basic opportunities. Moreover, they have invested tens of billions of rupees in establishing mobile towers and improving mobile infrastructure in order to provide telecom services in the remotest parts of the country. Unless the definition of AGR is amended retrospectively, in accordance with Trai Recommendations, the telecom industry and the Digital India initiative of the government would meet an untimely demise.
The respite will also benefit consumers by ensuring continuity of service to subscribers, and will prevent a hike in voice and data tariffs. Further, it would ensure increased competition and choice as the multi-poly regime, mandated by National Digital Communication Policy, would continue to usher in continued benefits.
The government too stands to benefit by this decision. It will restore foreign investor confidence and lead to continued revenue collection. A significant portion of the telecom companies’ funding comes from the Indian financial institutions. Bankruptcy will jeopardise the payment not only of AGR, but also other dues to the government.