The Finance Ministry is unlikely to give consent to any cut in the licence fee and the spectrum usage charges (SUC) for relief to telcos to meet adjusted gross revenue (AGR) dues, due to its own revenue position and economic slowdown.
In the February budget estimates for 2020-21, the revenue projection from these two heads (licence fee and the SUC) has been more than doubled to Rs 1.33 lakh crore from the current estimates of Rs 58,989 crore, ruling out any scope for relief. The projection didn't include AGR dues or spectrum auction proceeds.
According to FinMin officials, telcos were granted the two-year moratorium relief last year on the spectrum dues payment on a past spectrum auction, keeping in mind their stressed finances. A Cabinet Secretary-headed panel had approved the moratorium for 2020-21 and 2021-22.
If the Prime Minister's Office (PMO) decides on such a cut, it will be a different thing. But at the consultation level, the FinMin will state its precarious revenue position.
The FY20 fiscal deficit has been expanded, pegging it at 3.5 per cent for FY21 with poor tax and non-tax revenue positions due to slowdown and low growth.
Economic Affairs Secretary Atanu Chakraborty said the budget estimates from the Telecom Ministry revenues were from licence fees and the SUC and didn't include the AGR dues.
Chakraborty's remark made it clear that any relief is unlikely for telcos, which have sought 10-12 years to pay these AGR dues.
The Supreme Court's AGR order came in October 2019.
"Receipts under 'other communication services' mainly related to the licence fees from telcos and on account of the SUC. The DoT collects recurring licence fees from telecom service providers licensed by it," the government said in the Receipt Budget for 2020-21.
Telecom operators pay 3-5 per cent and 8 per cent of the AGR as the SUC and licence fees, respectively. They also pay 5 per cent Universal Service Obligation Fund charges.
As the government wouldn't be able to extend any relief directly on the AGR dues, since it''s a Supreme Court mandated process, but it also doesn't want any telco to shut shop under the AGR payment stress, there are talks of reduction in the licence fee and the SUC to help them.
A cut in these two charges has been the industry's long-standing demand and the Telecom Regulatory Authority of India has also backed it. Even last week Airtel chief Sunil Mittal after his meeting with Telecom Minister R S Prasad said he had raised the issue of high taxation and levies in the sector.
(This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.)
As you are no doubt aware, Swarajya is a media product that is directly dependent on support from its readers in the form of subscriptions. We do not have the muscle and backing of a large media conglomerate nor are we playing for the large advertisement sweep-stake.
Our business model is you and your subscription. And in challenging times like these, we need your support now more than ever.
We deliver over 10 - 15 high quality articles with expert insights and views. From 7AM in the morning to 10PM late night we operate to ensure you, the reader, get to see what is just right.
Becoming a Patron or a subscriber for as little as Rs 1200/year is the best way you can support our efforts.