Government Fails To Spend Over Rs 20,000 Crore For Rural Telecom Roll Out

This is a curious case of inefficiency. The government had introduced a 5% levy on telecom operators for the Universal Service Obligation Fund (read: funds for rural telecom rollout), but the government has failed in spending this money.

The government auditor CAG has pulled up the Department of Telecom (DoT) - the agency responsible - for not utilising over Rs 20,737 crore which were collected for the USO Fund, says a report.

The USO Fund was set up in April 2002 for rolling out telecom and internet networks in rural areas irrespective of the commercial viability, according to National Telecom Policy of 1999.

A total levy of Rs 31,109.36 crore was collected between 2002-03 and 2009-10 by DoT, but a disbursement of only Rs 10,371.44 crore was made from the Fund in this period, the report said, quoting a CAG report tabled in Parliament.

"DoT may ensure viable schemes for implementation of universal service obligations for rural and remote areas so that the USO objectives are met and the fund balances are utilised for the purpose which these are collected," CAG report said.

All telecom operators are expected to pay a 5% of their revenues for the USO Fund. The implementation of the USO for rural and remote areas is undertaken by telecom service providers, who are reimbursed net cost from the fund that is administered by DoT.

State owned telco BSNL gets about Rs 2,000 crore every year from this USO Fund for rolling out land line services in rural areas in which it suffers losses as the rental revenue collected is only a fraction of its operating expenses of over Rs 12,000 crore in rural telephony.