Prelims Syllabus : Industries – Textile, E-Commerce, Pharma, Service Mains Syllabus : GS-III Effects of Liberalization on the Economy, Changes in Industrial Policy and their effects on Industrial Growth.
Why in News?
- The Supreme Court has recently ordered the MDs and directors of few major telecoms to pay their AGR dues immediately.
What is AGR?
- Adjusted Gross Revenue (AGR) is the usage and licensing fee that telecom operators are charged by the Department of Telecommunications (DoT).
- It is divided into spectrum usage charges and licensing fees, pegged between 3-5 percent and 8 percent respectively.
- Spectrum usage charges is the charge that is required to be paid by the licensees providing mobile access services, as a percentage of their Adjusted Gross Revenue (AGR).
- The spectrum slabs/rates for the same are notified by the Government from time to time.
How AGR is Calculated?
- The definition of AGR has been under litigation for 14 years.
- While telecom companies argued that it should comprise revenue from telecom services, the DoT’s stand was that the AGR should include all revenue earned by an operator, including that from non-core telecom operations.
- The AGR directly impacts the outgo from the pockets of telcos to the DoT as it is used to calculate the levies payable by operators.
- Currently, telecom operators pay 8% of the AGR as licence fee, while spectrum usage charges (SUC) vary between 3-5% of AGR.
Why are Issues with Telecoms on Paying Huge Amount?
- Telecom companies now owe the government not just the shortfall in AGR for the past 14 years but also an interest on that amount along with penalty and interest on the penalty.
- While the exact amount telcos will need to shell out is not clear, as in a government affidavit filed in the top court, the DoT had calculated the outstanding licence fee to be over ₹92,000 cror
- However, the actual pay-out can go up to ₹4 lakh crore as the government is likely to also raise a demand for shortfall in SUC along with interest and penalty.
- Of the total amount, it is estimated that the actual dues is about 25%, while the remaining amount is interest and penalties.
What are the Concerns?
- The telecom industry is reeling under a debt of over ₹4 lakh crore and has been seeking a relief package from the government.
- Even the government has on various occasions admitted that the sector is indeed undergoing stress and needs support.
- Giving a ray of hope to the telecom companies, the government recently announced setting up of a Committee of Secretaries to examine the financial stress in the sector, and recommend measures to mitigate it.
- To enhance the growth of the telecom sector, improve the quality of service, and generate resources for the Telecom Service Providers (TSPs), a new infrastructural policy is the need of the hour.
- The government needs to provide an enabling environment for telecom operators. In order to achieve that, a long-term vision plan must be made accordingly.
- Enhanced accessibility of the broadband services will enable the digital empowerment of India; hence adequate steps must be taken by the government to strengthen the overall telecom sector.