DoT may propose USOF cut resulting into AGR reduction

Department of Telecommunications (DoT) is likely to propose a reduction in the universal service obligation fund (USOF) levy by 2 percentage points to 3 percent.
Ericsson data network userDoT’s planned proposal before the digital communications commission (DCC) will pave way for mobile operators to pay adjusted gross revenue (AGR) at 6 percent against 8 percent at present. The development will assist mobile operators such as BSNL, Bharti Airtel, Vodafone Idea and Reliance Jio to save around Rs 3,000 crore per year.

DoT has not decided on any reduction in the rate of spectrum usage charge. In addition, DoT has not taken any decision on providing any relief on the Rs 1.47 lakh crore of adjusted gross revenue (AGR) following the order of the Supreme Court on October 24, Financial Express reported on Monday.

Telecom Regulatory Authority of India (TRAI) has already recommended 2 percentage cut in the USO levy. TRAI had said since the government gets 3 percent from the licence fee — the 5 percent USO goes into the USO fund for improving rural teledensity – India government revenues won’t be hit by any such reduction.

TRAI earlier had questioned the utilisation of the fund while giving its recommendations in 2015 for a reduction in USO levy. It had noted that even after passage of more than 10 years, utilisation was well below 50 percent.

“There is evidence that the flows of investment from the USOF have not met expectations. Since USOF monies go to the Consolidated Fund of India, and releases are controlled by budgetary processes, unutilised USOF revenues essentially provide budgetary support to fill the fiscal gap,” TRAI said earlier.

Telecom minister Ravi Shankar Prasad earlier this year wrote to finance minister urging for a cut of 2 percentage points in the USO levy as rural tele-density has increased significantly since 2003 when the rural fund was set up.