Budget 2022: Telecom sector gets a top-up for digital connectivity

Allocation to BSNL tripled to Rs 44,720 cr for 4G spectrum, tech upgrade and recast; Rs 6,850 cr kept for GST and VRS; in fact, BSNL gets over half of DoT's Rs 84,586 crore outlay

The government has promised to roll out 5G, enhance broadband services in rural areas, and boost local manufacturing under the productivity-linked incentive scheme in the Union Budget for 2022-23.

Allocation to state-run Bharat Sanchar Nigam (BSNL) has tripled year-on-year to Rs 44,720 crore for 4G spectrum, technology upgradation, and restructuring related expenses. Apart from this, BSNL has also been allocated Rs 6,850 crore for GST and VRS related payments. In fact, BSNL has received over half of the Department of Telecommunications' allocationof Rs 84,586 crore.

Finance Minister Nirmala Sitharaman said that 5G spectrum auction will be conducted in 2022 to facilitate commercial service rollout by private firms in FY23. “A scheme for design-led manufacturing will be launched to build a strong ecosystem for 5G as part of the Production Linked Incentive Scheme,” she said. “To enable affordable broadband and mobile service proliferation in rural and remote areas, five per cent of annual collections under the Universal Service Obligation Fund will be allocated.”

Sitharaman said the government will also award contracts for laying optic fibre in all villages through public-private partnership in FY23. Industry players welcomed the announcements, with Ericsson’s Managing Director (India) Nitin Bansal saying the measures will help bridge the digital divide and strengthen the Make in India initiative.

“On one hand it addresses digital connectivity for all through optic fibre and digital services in all the villages by 2025 and on the other side it sets the foundation for India’s 5G readiness through spectrum auctions, R&D impetus, USOF allocation,” said Ankit Agarwal, the managing director of STL.

Cellular Operators Association of India Director General SP Kochhar said: “The Budget is pro-growth with emphasis on providing further impetus to the digital India initiative. However, we are a bit disappointed that our long standing demands remain unaddressed. We look forward to continued and constructive engagement with the government for reduction of levies on the sector.”