Connecting BSNL Employees / Subscribers 4 Growth of BSNL: BSNL’s proposal to get R2,750 cr as continued subsidy rejected

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BSNL’s proposal to get R2,750 cr as continued subsidy rejected

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A move that would further strain the state-run telecom operator BSNL, the Universal Services Obligation Fund (USOF) administrator has rejected a proposal to allot R2,750 crore to the public sector company as continued subsidy for maintaining wireline connections in rural areas installed before April 1, 2002.


The proposal was made by the Telecom Regulatory Authority of India (Trai) on May 14 at the behest of the Department of Telecommunications (DoT), which had asked the regulator to give its opinion on whether such subsidy intended for a period of three years, which expired last year, should be extended as urged by BSNL.
The regulator in its recommendation had outlined an amount of R1,500 crore for the first year after the expiry of the subsidy period and another R1,250 for the subsequent year ending September 2012.
In a note written to the DoT secretary, the cash-rich fund’s administrator, N Ravi Shankar, who is also an additional secretary at DoT, has explicitly stated that any such move would lead to duplication of subsidy for the same activity.
“The rural telephone density can be improved by primarily investing in provisioning and improvement in general telecom infrastructure schemes such as shared mobile infrastructure scheme and optical fibre network to panchayats and villages. Also there is an existing agreement with BSNL for provision of rural wireline broadband schemes, giving the subsidy in accordance with the Trai’s recommendations dated 14 May 2012 will lead to duplication of subsidy for the same activity,” the note says.
In order to arrive at a final decision the telecom secretary R Chandrasekhar has proposed that a final decision on the matter be taken after thorough discussion among the chairman and managing director of BSNL, member finance of DoT, member technology, member services and the USO fund administrator.
The government had approved to give the company a total subsidy of R6,000 crore to be spread over three years ending September 2011 as compensation for abolishing the Access Deficit Charge or ADC a fund which channelised a percentage earnings of private telecom operators to subsidise the state run telco’s rural operations. The subsidy was allotted to support wireline connections installed in rural areas before April 2002. However the public sector unit had appealed to the government to continue with the subsidy for another two years.

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