Cabinet approves subsidy support of Rs 1,250 cr to BSNL for rural wireline connections

The Union Cabinet has approved a proposal to extend subsidy support of Rs 1,250 crore to state-run BSNL as compensation for deficit incurred by it in operating rural wire-line connections installed prior to April 1, 2002.

The amount will be provided from universal service obligation fund (USOF). As on March 31, 2014, the eligible rural wire-line connections stood at 32.32 lakh. The Cabinet also approved that the subsidy support would be the last and final payment and no further request from BSNL for financial or subsidy support from USOF on this count shall be considered.

In order to make BSNL eligible for subsidy funding on nomination basis from USOF, amendment will be required in Rule 526 of the Indian Telegraph Rules (ITRs), 1951. Full sum amount of Rs 1,250 crore shall be disbursed, consequent to necessary amendment of the ITRs and signing of USOF agreement with BSNL.

USOF since its inception in 2002 has been providing subsidy for BSNL for the rural wire line connections installed prior to April 1, 2002. A total of Rs 8,692 crore has been extended as USOF subsidy support till date for the same.