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The Finance Ministry has turned down the Communication and Information Technology Ministry's plea to bring the cost of Optical Fibre Network for Broadband Connectivity to Panchayats under non-Plan expenditure.
Plan expenditure is mostly for the development work and for the creation of assets. Such expenditure is related with various flag ship schemes such as Bharat Nirman. On the other hand, non-Plan expenditure is referred to expenses on subsidy, interest and salary. The Budget distributes the revenue accordingly.
According to a source, “The Finance Minister in his letter to Mr Kapil Sibal, Minister for Communication and Information Technology, mentioned that operationalising the National Optical Fibre Network for Broadband Connectivity at panchayats level requires the same kind of administrative and financial approval whether under Plan side or non-Plan side.” The Government aims to spend Rs 20,100 crore for this project.
The Finance Ministry, according to the source, also said that rural telecom connectivity includes rural teledensity and broadband coverage. This is also one of the six components of Bharat Nirman, a flagship scheme. “All the schemes of Bharat Nirman were part of the Plan Expenditure, except Universal Service Obligation Fund. Now even this is a part of Plan Expenditure,” he added.
Funding arrangements
The Finance Ministry believes that creation of optical fibre network is development in nature. Now, it has advised the Communication Ministry to modify the funding arrangements with the approval of the Cabinet, so that the fund can be withdrawn from plan allocation.
This is not the first time that the Finance Ministry has shot down Telecom Ministry's views with regard to this project. The Department of Telecom had earlier come around to accepting Finance Ministry's view that a special purpose vehicle should be set up for implementing the national optical fibre broadband project.
The DoT was earlier insisting on appointing Bharat Sanchar Nigam Ltd as the agency for executing the project aimed at connecting all the panchayats. The Finance Ministry had said that an SPV incorporated under the Indian Companies Act may be entrusted with the execution of the programme. The SPV will select an implementing agency through competitive bidding. This is exactly what the DoT has incorporated in the final note sent to the Cabinet.
The project envisages connecting all the village panchayats with optic fibre cable. The Government is hoping to drive e-governance projects on this network. The proposal was first mooted by Mr Sam Pitroda, advisor to the Prime Minister. The Telecom Regulatory Authority of India had also suggested setting up this network but wanted it to be extended it up right to all the villages.
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