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Budget 2020 offers no respite for telecom sector, says Rajan Mathews -DG Cellular Operators Association of India

Rajan S Mathews

Union Budget 2020: Even though the Economic Survey acknowledged the significance of the telecom sector for India's economy and how it supports millions of jobs, while making substantial contribution to the funding of the public sector, Budget FY21 steered clear from talking about major issues facing the sector, or provided any relief geared towards the sector's sustainability and growth.

While the industry welcomes the umbrella theme of the Budget, which emphasises on pushing for an aspirational India, there were no announcements made regarding the rationalisation of levies and taxes currently imposed on the severely-distressed telecom sector.

The sector pays 18% goods and services tax (GST), 8% licence fee, 3-6% spectrum usage charge (SUC), which adds to being the highest compared to the rest of the world.

We were hopeful this Budget will introduce viable reforms that can provide relief to the sector reeling under a debt of
Rs 7.7 lakh crore. The telecom sector, which contributes 6% to the country's gross domestic product (GDP), has been suffering from acute financial crises due to dilapidating revenues and rising debt, emanating from low tariff rates, falling average revenue per user (ARPU), immense competition and the recent AGR judgment passed by the Supreme Court, pressurising the sector even further.

While finance minister Nirmala Sitharaman rightfully stated that the nation's growth and digital inclusion essentially pivots on advanced technologies such as artificial intelligence, internet of things, robotics, machine learning and analytics, and that the new India will be driven by innovation, none of these initiatives are possible on ground without a financially healthy and strong telecom sector.

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On the positive side, the Budget laid special emphasis on augmenting domestic manufacturing of network products, mobile phones, electronic equipment, semiconductors and healthcare products, and allotted Rs 27,300 crore for the development of industry and commerce by 2021. It talked about linking of 1 lakh gram panchayats to BharatNet, through Fiber to the home (FTTH), by this year, and allocated Rs 6,000 crore towards this.

The project aims to extend high-speed broadband connectivity across the length and breadth of the country, to facilitate last-mile delivery of e-governance, e-health, e-education, e-banking, internet and other utility services.

Since BharatNet is funded by the USOF, set up to enhance telephony and internet connectivity services across rural and remote parts of the country, a relaxation in this levy from 5% to 3% would have been a welcome move.

It is also disheartening to see that the telecom sector was not given an infrastructure status even though an array of crucial reforms have been announced on infrastructure.The telecom sector, which is the economic backbone of the country and has a potential to drive growth towards the $5-trillion economy goal,
did not receive the support it truly deserved.

The author is Director General, Cellular Operators Association of India