Government must intervene in telecom slash levies on telecom for india’s sake

Government must intervene in telecom slash levies on telecom for india’s sake

The government has to take a call on what it wants from the telecom sector: to enable every Indian to have access to the digital economy that will create myriad new opportunities and jobs or to serve as a cash cow in the immediate present. Unfortunately, the choice is one or the other.

SBI chairman Arundhati Bhattacharya recently worried publicly that about the four-lakh-crore-rupee outstanding debt of the telecom sector could go sour. If that happens, that would add a sizeable chunk to Indian banks’ already onerous bad debt burden. The telecom companies are under pressure to invest huge amounts in their infrastructure or fall by the wayside as technology and the competition march ahead. The government must lower its take from telecom revenues, say, by half.

The rest of the world will move to a new standard of superfast mobile communications dubbed 5G and the Indian economy cannot really afford to fall behind. At stake is not the ability of teenagers to download TV shows and movies, as some people seem to think.

High-resolution images — medical scans of all kinds, engineering drawings, all kinds of configurations of data generated from the output of the Internet of Things, say, a jet engine part that needs to be evaluated for maintenance, instructional videos from massive open online courses (MOOC) essential for professionals to stay relevant in the job market, apart from other things — will suffuse data networks. Economies in which citizens can access such data seamlessly will have a competitive edge over the rest. Telecom, in other words, will have even bigger positive externalities for the economy than it has at present.

When the government used to allocate spectrum to a telco along with the licence, with no separate, upfront payment for the spectrum, it made sense to take a large share of telecom revenue as licence and spectrum usage fees. Once auctions set in, and telecom operators began to buy up their spectrum with huge, upfront payments, the justification for levies other than the tax on profits disappeared. The government must act on this logic.