Union Cabinet approves relief package for stress-ridden telcos, gives 4-year moratorium on AGR dues
New Delhi | Jagran Business Desk: In a major relief for the stress-ridden telecom operators, the Union Cabinet on Wednesday approved the relief package for the telcos, aimed at giving relief to companies such as Vodafone Idea that have to pay thousands of crores in unprovisioned past statutory dues, along with several structural reforms to strengthen the sector.
The wide set of measures proposed to entail reforms for the ailing sector by way of granting a moratorium on unpaid dues, redefining AGR prospectively and cut in Spectrum Usage Charges. The move will be most beneficial for the stress-ridden Vodafone Idea.
"In the telecom sector, nine structural reforms and five process reforms have been approved by the cabinet. These reforms will change the framework of the entire telecom sector. They will deepen and broaden the industry", Ashwini Vaishnaw, Minister for Communications said.
"PM took a bold decision over AGR (adjusted gross revenue) today. A decision has been taken to rationalise the definition of AGR. All non-telecom revenue will be taken out of AGR", he added.
He further informed the cabinet meeting, it was decided that penalty on payment of licence fees, spectrum user charges and all kinds of charges have been completely scrapped.
"There was a regime of heavy interest, penalty and interest on penalty on payment of licence fees, spectrum user charges and all kinds of charges. It has been rationalised today. Annual compounding (of interest) will be done instead of monthly compounding," said the minister.
"A reasonable interest rate of Marginal Cost of Funds based Lending Rate (MCLR) plus 2 per cent interest rate has been offered and the penalty has been completely scrapped," he added.
Vaishnaw said the move will pave way for large-scale investments in the telecom sector. "Investment means employment - more the investment, more the employment," he stated.
The definition of AGR, which had been a major reason for the stress in the sector, has been rationalised by excluding the non-telecom revenue of telecom companies. AGR refers to revenues that are considered for payment of statutory dues. The minister said that 100 per cent of FDI (Foreign Direct Investment) in telecom via the automatic route was approved by the Cabinet.
(With Agencies Inputs)
Posted By: Talibuddin Khan