The Hindu : BSNL gets relief

Online edition of India's National Newspaper
Wednesday, Sep 03, 2003

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National

BSNL gets relief

By Our Special Correspondent

NEW DELHI SEPT. 2. The Government has granted immediate tax relief of Rs. 4,000 crores to the Bharat Sanchar Nigam Limited (BSNL) which is facing an additional financial burden of Rs. 40,000 crores over five years due to the after-effects of its conversion from a government department to a company. Its income had also fallen after market forces were allowed to dictate international and long distance telephony rates.

The relief is in the form of waiver of licence fee and spectrum charges to be paid to the Central exchequer for the current fiscal and extension of moratorium on payment of Government loan (Rs. 7,500 crores) and interest till the end of March 2005.

The measures will reduce the additional burden for 2003-04 to Rs. 3,600 crores but BSNL will still have to seek loans from the market and cut developmental plan for the year.

More relief to the public sector behemoth is in the offing as the Cabinet Committee on Economic Affairs (CCEA) at its meeting today has left the quantum of dividend payable by BSNL to the discretion of its board of directors. The dividend for the current year works out to Rs. 750 crores.

The CCEA has also asked BSNL to examine the financial implications of its rural telephony operations jointly with the Finance Ministry so that the corporation does not suffer a net outgo of resources.

This is the second time the Cabinet has approved a relief package for the public sector behemoth to enable it to continue providing services to its marginal customers in urban as well as rural areas. Over half of its urban connections and all its one crore rural phones are loss making. Despite the first package announced in February 2002, BSNL was burdened with Rs. 4,125 crores as additional taxes and staff costs including pensionary obligations.

The Government's latest decision partly meets the expectations of BSNL and its staff and officers. BSNL had desired that the Government completely waive the licence fee and spectrum charges till the year 2007, as they constituted almost half of the additional estimated financial burden of Rs. 40,000 crores. The staff wants the Central exchequer to bear the pension-related obligation estimated at Rs. 4,600 crores over five years beginning March 2002 while the officers are pressing for service-related issues.

Officials, however, were relieved over the decision to set up a joint committee to examine rural telephony related issues. BSNL has claimed that the areas covered under a fund to reimburse rural loss-making operations are limited and the result may be that BSNL becomes a net contributor to the Universal Service Obligation (USO) fund — it could end up contributing more to the USO fund than it receives from the fund.

They are hopeful that the Government would provide it enough tax-free grant-in-aid to enable it to offset losses in providing services to rural areas.

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