Union Cabinet extends Rs 1,250 crore subsidy to BSNL

The Union Cabinet on Wednesday approved the proposal to extend subsidy support of Rs 1,250 crore to Bharat Sanchar Nigam Limited (BSNL) from the Universal Service Obligation Fund (USOF).

The amount compensates for the deficit the state-run telecom provider incurred in operating the rural wire-line connections installed prior to April 1, 2002.

The eligible rural wire-line connections installed across India prior to April 1, 2002, are 32.32 lakh.

The Cabinet meeting, chaired by Prime Minister Narendra Modi, also decided that the subsidy support of Rs 1,250 crore would be the last and final payment and no further request from BSNL for financial or subsidy support from USOF on this count would be considered.

In order to make BSNL eligible for subsidy funding on nomination basis from USOF, an amendment will be required to Rule 526 of the Indian Telegraph Rules (ITRs), 1951.

It stipulates that the criteria for selection of Universal Service Providers would be made through bidding from among eligible entities for implementation of USOF schemes. A corresponding Amendment in Rule 525 will also be required.

USOF since its inception in 2002 has been providing BSNL subsidy 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 these rural wire-line connections.

The Telecom Regulatory Authority of India (TRAI) in its report on May 14, 2012, had recommended Rs 15,000 crore as subsidy support for the period July 18, 2011, to July 17, 2012, and Rs. 1,250 crore for the timeframe of July 18, 2012 to July 17, 2013.

The Telecom Commission in 2012 considered the views of TRAI and USOF and directed that an assessment be carried out about the current status of the infrastructure.

In July 2015, the Telecom Commission considered the findings of the evaluation/assessment study conducted by the National Institute of Communication Finance and recommended the subsidy support of Rs 1250 crore to BSNL.

--IANS

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