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Business News/ Economy / BSNL to get 89k cr, this time for 4G/5G

NEW DELHI : The Cabinet Committee on Economic Affairs (CCEA) on Wednesday cleared a 89,047 crore revival package for Bharat Sanchar Nigam Ltd (BSNL), the third such government handout for the state-run telco since 2019. The carrier will use the amount for acquiring spectrum, so that it can begin to offer 4G services within months and 5G services by 2024 across the country.

With this, the total government assistance to India’s No. 4 carrier has swelled to 3.22 trillion. The government had earlier approved a 69,000 crore package in 2019 to revive and stabilize the telecom business, followed by 1.64 trillion in July 2022 to improve its balance sheet and expand capex.

The latest package is meant for securing 5G spectrum in the 700 Mhz, 3300 Mhz, 26 Ghz, and 2,500 Mhz bands, which can be used for 4G as well. The airwaves will be given at auction-determined prices plus goods and services tax, which amounts to 46,338 crore, 26,184 crore, 6,564 crore, and 9,428 crore for the four bands. BSNL’s authorized capital will rise from 1.5 trillion to 2.1 trillion.

“Time has come that BSNL should be in the leagues of major players in the country, and provide services where others do not provide," said communications and IT minister Ashwini Vaishnaw. He said the carrier will have to provide good quality services in order to compete with the market on its own. Private telcos Airtel and Reliance Jio have already begun offering 5G services across 200,000 sites in the country.

“With this spectrum allotment, BSNL will be able to provide pan-India 4G, 5G services, fixed wireless access services, captive non-public networks and coverage in rural and uncovered villages," Vaishnaw added. BSNL has already placed orders with TCS-CDoT and ITI to buy equipment for 100,000 4G sites for about 19,000 crore.

Vaishnaw said BSNL will become debt-free in three years, and that the government won’t infuse any further equity or provide additional state-backed debt.

BSNL chairman and managing director P.K. Purwar said the debt reduction will take place through internal accruals. Debt has been reduced by 10,000 crore by FY23-end to 22,289 crore, he said. He added that within six months, the carrier will revamp its IT, HR and technology platforms to make them consumer-friendly to compete in the market. “4G and 5G installations have been done in 200 sites, and those will be tested live for three months, after which there will be rapid rollout," the minister added. He also noted that 3G will be shut down, as has been done by other private operators.

Among other decisions, the CCEA approved an increase in minimum support price (MSP) for 14 mandated kharif crops for 2023-24, including paddy, maize, cotton, tur, and bajra.

Mint had first reported in May that the government may increase MSP for key kharif crops in 2023-24 by 3-8%, with moong potentially witnessing the season’s highest among key cereals and pulses. MSP for moong was increased the highest among all 14 kharif crops to 8,558 per quintal from 2022’s 7,755 a quintal.

After moong, the second-biggest hike was for sesame to 8,635 a quintal from 7,830 earlier. The Centre has fixed cotton MSP at 6,620 a quintal for medium staple variety and 7,020 per quintal for long staple variety, 540 and 640 above the previous season’s prices. The MSP for paddy (common) has been fixed at 2,183 per quintal, against 2,040 per quintal in the last season, while the MSP for paddy (grade A) has been fixed at 2,203 per quintal, against 2022’s 2,060 per quintal.

The hike in MSP will “ensure remunerative prices to the growers for their produce and encourage crop diversification," Union food minister Piyush Goyal told reporters.

“The increase of 8.9% in MSP of cotton is good news as farmers who had withheld cotton have realized lower prices, while paddy MSP is more than the same in maize," said former Union agriculture secretary Siraj Hussain. “It seems there is a realization that maize cannot really be used for ethanol."

MSP serves as a crucial safety net for farmers in India by guaranteeing a minimum price for their produce. It also helps ensure food security and stabilizes market prices of staples. The government also uses the MSP to encourage farmers to cultivate certain crops.

“While the MSP press release providing reference cost data suggests the reference cost is for the 2023-24 kharif season, it does not seem to be the case. Cost data seems to be from 2020-21 cost of cultivation estimates, which means that MSP misses to compensate for cost increase from 2021-22 to 2023-24," said Anil Sood, a farm expert. “The imputed value of labour and land are extremely low, and don’t provide for a fair cost of living for a farming family. We must link imputed values to fair cost and reference C3 costs for MSP to prevent farmers from giving up agriculture and if we want rural economy to progress. Nine-year CAGR (compound annual growth rate) in MSP suggests that we just about cover the cost of general inflation for paddy and maize farmers," Sood added.

The CCEA also approved the continuation of ‘Exploration of Coal and Lignite scheme’, a central sector scheme with an estimated additional expenditure of 2,980 crore for the period of FY22 to FY26.

The approval will provide an outlay of 1,650 crore for ‘Promotional (Regional) Exploration’ and 1,330 crore for ‘Detailed Drilling’ in non-Coal India Ltd areas. Approximately 1,300 sq. km area will be covered under regional exploration, and around 650 sq. km area will be covered under detailed exploration.

Regional exploration is the first stage of exploration wherein large areas are explored to find broad availability of coal seams and other resources. Detailed exploration is carried out in the second stage in potential areas identified under regional or promotional exploration.

The Cabinet also approved metro connectivity from Huda City Centre to Cyber City with Spur to Dwarka Expressway, Gurugram, covering the distance of 28.50 km having 27 stations on the route.

The total completion cost of the project will be 5,452 crore and will be done by a 50:50 special purpose vehicle (SPV) between the Centre and the Haryana government. The project is expected to be completed within four years.

Gulveen Aulakh
Gulveen Aulakh is Senior Assistant Editor at Mint, serving dual roles covering the disinvestment landscape out of New Delhi, and the telecom & IT sectors as part of the corporate bureau. She had been tracking several government ministries for the last ten years in her previous stint at The Economic Times. An IIM Calcutta alumnus, Gulveen is fluent in French, a keen learner of new languages and avid foodie.
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Updated: 08 Jun 2023, 12:13 AM IST
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