After fuel and food subsidy dole-outs, the government seems to have taken frenzy for subsidies on mobile bills too, as populist measures gain significance ahead of the key state elections in India.
According to a media report, the Planning Commission has proposed that the government provide subsidy support to the extent of a fifth of all mobile bills that are less than Rs.300 a month for customers in rural India, by dipping into the dedicated Universal Service Obligation Fund (USOF).
Furthermore, an offer is also made wherein all first time rural customers are given a one-time subsidy of Rs.250, in order to promote telecom penetration and improve rural tele-density.
It is envisaged that rural India is the key target market likely to drive the next round of growth – and the target is to reach a rural tele-density of 40% by 2014. The government envisions providing telephone connection and broadband facilities on demand across the country at an affordable price.
At present, the number of rural mobile phone connections stands at 308.87 million, apart from 97.09% of the villages in India been covered by the Village Public Telephones to enable public access.
The USOF was established almost a decade ago with the objective of providing access to telegraph services to people in the rural and remote areas at affordable and reasonable prices. In latest, under the USOF scheme, a total of 2.25 lakh broadband connections have been provided in rural and remote areas.
Amidst all these rural telecom developments, I’ve my own apprehensions regarding the reach of subsidies on the mobile bills, especially, in the rural India – given that hardly 4% of the total mobile connections in India are in the post-paid, or billing, segment.
Besides, a subdued rural telecom penetration to the extent of less than a third of total connections hardly provides any ground for equitable distribution of the long-nurtured USOF subsidy portion across the spectrum of rural subscribers.
In fact, a majority of the billing customers in India are from premium profile category, whose monthly telecom invoice is unlikely to be less than Rs.500, as against a proposal of Rs.300 threshold limit placed with the government.
Hopefully, this proposed subsidy measure does not balloon into yet another source of making money by means of corruption for the government babus. What say?