Telecom Dept says it will stop work on Defence cable network if funds not given

The Telecom Ministry has told the Ministry of Finance that it will be forced to stop work on the crucial Defence optical fibre cable if adequate funds are not allocated in the forth coming Budget.

The Department of Telecom had submitted an annual Plan proposal of Rs 6,767 crore for the year 2012-2013. This included Rs 5,000 crore for building the optical fibre cable network which is important from the point of view getting additional spectrum vacated by the Defence forces.

USO fund

Separately, the DoT had raised a demand of Rs 8,600 crore under Non-Plan head for the Universal Services Obligation fund.

However, the Finance Ministry has allocated only Rs 800 crore under the Plan category and Rs 4,000 crore for the USO fund. “In view of the inadequacy of funds, the DoT would not be in a position to continue its optical fibre cable network scheme for Defence services in the existing financial year,” said a top functionary of the Ministry of Communications.

“It is apparent from the allocation under Plan that the demands for OFC-based network for Defence service have been totally ignored while allocating the Gross Budgetary Support,” the officials added.

The stand-off between two Ministries over fund allocation could have impact on spectrum availability and revenue generation for the Government.

Unless the cable network is completed, Defence forces will not vacate more spectrum. If spectrum is not available then Government will not be able to get more revenues from selling it. The Communication and IT Minister, Mr Kapil Sibal, will write a letter to Mr Pranab Mukherjee, Finance Minister, to increase the allocation to the DoT both under Plan and Non-Plan heads.

However, if we compare it with the plan allocation of Rs 3,418 crore made in Budget 2011-12 for the DoT, the proposed allocation for 2012-13 is over 40 per cent higher.

Interestingly, the percentage increase is much higher than what is being proposed for other Ministries under a category-based new allocation formula.

According to a source, this year's Budget allocation will be made to the Ministries under three categories.

First group is likely to get an increase of 20 per cent while for the second and third it could be 10 per cent and 5 per cent, respectively.

Expenditure classification

Though the DoT's allocation is above other ministries, the Communication Ministry grudge is also about classification of expenditure.

The Finance Ministry and the Planning Commission wants the restoration of Universal Services Obligation Fund (USOF) under plan category and accordingly allocation has been made.

On the other hand, the Communication Ministry wants the Cabinet decision to be followed in this regard.

The Cabinet decision puts this item under non-plan head. The Department of Communication does not feel appropriate to approach the Cabinet for reversing its decision and to modify the funding arrangement as suggested by the Finance Ministry.

(This article was published on February 22, 2012)
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