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Vajpayee's legacy: Laying the foundation for India's telecom revolution

Vajpayee government took some historic decisions to fast-track the growth in the telecom sector.

twitter-logo Manu Kaushik        Last Updated: August 16, 2018  | 20:25 IST
Vajpayee's legacy: Laying the foundation for India's telecom revolution

When former prime minister Atal Bihari Vajpayee formed the government in 1998, the telecom sector was in a complete mess. The telecom companies were bleeding and the teledensity was quite low. The usage of telecom services didn't gather pace due to expensive call rates (data didn't exist at the time!). Long before the Reliance Jio's big entry into the sector, Vajpayee government took some historic decisions to fast-track the growth in the telecom sector. Here's a list of some crucial decisions:

1. Since the introduction of New Telecom Policy 1994, the telecom sector growth picked up considerably. The teledensity jumped from 1.2 per cent in 1994 to about 2.3 per cent in 1999. Despite such high growth rates, India lagged behind some matured countries in terms of telecom penetration. The biggest bottleneck to the growth was high annual license fees that operators were supposed to pay to the government.

2. The NTP 1999 shifted to a revenue sharing model, whereby telcos would be charged one-time entry fee in addition to revenue sharing - about 15 per cent of their annual revenues - as against a multi-year license fee till then. The license was extremely high in those days. Telcos operating in metros were paying Rs 6,023 per subscriber license fee to the exchequer. Since the costs of services were high, the customers were charged exorbitant rates. In 1998, for instance, the income call rates were Rs 16.80 per minute, and the outgoing rates were even higher.

3. In 1999, some 22 cellular operators reported combined losses of Rs 7,700 crore. The revenue sharing model gave a huge fillip to telecom companies to invest in infrastructure. With lower revenues to share with the government, the telcos were able to lower tariffs which, in turn, led to higher consumption of telecom services and better teledensity.

4. During the Vajpayee era, the government was able to separate the policy formulation arm (Department of Telecom) from the service provider arm (BSNL). BSNL, which was founded in 2000, was corporatised with an aim to compete with private operators. For the first few years, BSNL was able to garner significant market share - equalling the customer base of Airtel by 2004. In a 2015 statement, union minister Ravi Shankar Prasad had said that "Vajpayee-led NDA government at the Centre had left BSNL with a profit of Rs 10,000 crore." But since then, the state-owned telecom operator is going downhill.

5. Setting up of TDSAT (telecom disputes settlement and appellate tribunal) in 2000 was a step to reconstitute telecom regulator TRAI and take away the judicial powers from it. The job of TDSAT is to resolve disputes in the sector, and its orders could only be challenged in the apex court.

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