Why in News?

• The Central government has urged the Supreme Court to give the telecom companies a 20-year window to pay the remaining amount of Adjusted Gross Revenue.

Highlights:

• In a long standing case related to the definition of Adjusted Gross Revenue (AGR) between Government and the Telecom companies, the 16 major telecom service providers were asked by the SC to pay a total due amounting 1,69,048.65 crores to the Government.

• The payment received till March 6, 2020, from these companies was ₹25,901.56 crores and dues to the tune of ₹1,43,271.74 crore remain outstanding.
• All the licensees are allowed to pay the unpaid or remaining amount of past dues in annual instalments over 20 years (or less if they so opt), duly protecting the net present value of the said dues using a discount rate of 8% (based on one-year marginal cost of lending rate of SBI which is currently 7.75%).
• The “formula” has been devised to soften the blow of the October 24, 2019 judgment directing the companies pay the AGR in three months.

Rationale:

• The move takes into consideration the larger interest, economic consequences on the nation and with a view to ensure that the Supreme Court order is complied with in letter and spirit.
• The vital issues related to the financial health and viability of the telecom sector and need for maintaining competition and level playing field in the interest of consumers were considered.
• The closure of one or more Telecom Service providers would adversely impact the digital connectivity of the country driving e-governance projects in commerce, banking and health.
• It would also dent the spread of digitization in Rural India.