International BusinessSunil Jain: Connecting Bharat
The budget is big on rural India and allocations for the Bharat Nirman project, for instance, have been hiked 45 per cent over those allocated in Budget 2008-09 — within this, allocations for projects like the Pradhan Mantri Gram Sadak Yojana have been hiked 59 per cent. While that’s all very well, it would be a good idea to see what’s happening on the government’s plans for connecting rural India, not by roads but by telephones. As compared to urban areas where around 90 per cent of people have phones, tele-density is just around 15 per cent for rural India.
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Since rural phones do not generate enough revenue to justify their installation, the government started a Universal Service Obligation (USO) Fund several years ago — the idea was to collect a cess of sorts from telecom firms and use this money to subsidise the rollout of phones in rural India. Initially, the money was meant to subsidise only fixed-land-line phones, but when it was later pointed out that it would be more cost-effective to subsidise mobile phones, the USO Fund’s charter was amended to allow this. The latest Economic Survey points out that between 2003-04 and 2008-09, a total of Rs 20,404 crore was collected under the USO Fund but just a little over a third of this (Rs 7,027 crore) was disbursed. So it’s hardly surprising that Bharat remains unconnected till this day.