India: Centre pulled up by Parliament audit watchdog over low use of telecom project fund

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The Parliament’s audit watchdog has pulled up the government for not utilising the funds generated through a levy on telecom operators for funding expansion of telecom services in rural India.
The Centre has so far disbursed only 40% of the fund collected since 2002-03 under the Universal Access Levy (UAL). Government data showed that Rs 87,500 crore has been collected through the levy but only Rs 39,172 crore of it has been utilised.
A Comptroller and Auditor General (CAG) report tabled in the Parliament stated, “The pace of expansion of services in rural India... has been very slow.”
“This indicated that the objectives of establishing the Universal Service Obligations Fund (USOF) exclusively for accelerating the growth of rural telephony were not achieved despite substantial collection of funds through Universal Access Levy (UAL),” the CAG concluded.
Private telecom operators pay 5% of their average gross revenue (AGR) from mobile services towards the USOF. The operators complained that the proportion of AGR they pay is much higher than what is mandated in other countries and demanded that the mandatory payment should be scrapped.
On Thursday, a sub-committee of Parliament’s audit watchdog, Public Accounts Committee, met to discuss the issue. Sources said finance ministry officials argued that the amount they extended for expansion of telecom services in rural India was dependent on the fund allocated for it in the Union budget.
“Money from USOF is given to BSNL. Is BSNL in a position to utilise this money? Given their bad financial conditions, it is not possible to give them more funds and expect them to deliver, so the allocations are also low,” said a finance ministry official.
Sub-committee chief Bhartruhari Mahtab and other members said that since a large proportion of the fund was unused, the levy collection should be stopped.
“Why don’t you leave it to private players to invest in telecom expansion? It is in their own interest to invest in rural connectivity, given that a large part of their subscription revenue is from rural India,” said Cellular Operators Association of India (COAI) secretary-general Rajan Mathews.