The Finance Ministry is unlikely to give consent to any cut in the licence fee and the spectrum usage charges (SUC) for relief to telcos to meet adjusted gross revenue (AGR) dues, due to its own revenue position and economic slowdown.
In the February budget estimates for 2020-21, the revenue projection from these two heads (licence fee and the SUC) has been more than doubled to Rs 1.33 lakh crore from the current estimates of Rs 58,989 crore, ruling out any scope for relief. The projection didn't include AGR dues or spectrum auction proceeds.
According to FinMin officials, telcos were granted the two-year moratorium relief last year on the spectrum dues payment on a past spectrum auction, keeping in mind their stressed finances. A Cabinet Secretary-headed panel had approved the moratorium for 2020-21 and 2021-22.
If the Prime Minister's Office (PMO) decides on such a cut, it will be a different thing. But at the consultation level, the FinMin will state its precarious revenue position.
The FY20 fiscal deficit has been expanded, pegging it at 3.5% for FY21 with poor tax and non-tax revenue positions due to slowdown and low growth.
Economic Affairs Secretary Atanu Chakraborty said the budget estimates from the Telecom Ministry revenues were from licence fees and the SUC and didn't include the AGR dues.
Chakraborty's remark made it clear that any relief is unlikely for telcos, which have sought 10-12 years to pay these AGR dues.
The Supreme Court's AGR order came in October 2019. "Receipts under 'other communication services' mainly relate to the licence fees from telcos and on account of the SUC. The DoT collects recurring licence fees from telecom service providers licenced by it," the government said in the Receipt Budget for 2020-21.
Telecom operators pay 3-5% and 8% of the AGR as the SUC and licence fees, respectively. They also pay 5% Universal Service Obligation Fund charges.
As the government wouldn't be able to extend any relief directly on the AGR dues, since it's a Supreme Court mandated process, but it also doesn't want any telco to shut shop under the AGR payment stress, there are talks of reduction in the licence fee and the SUC to help them.
A cut in these two charges has been the industry's long-standing demand and the Telecom Regulatory Authority of India has also backed it. Even last week Airtel chief Sunil Mittal after his meeting with Telecom Minister R.S. Prasad said he had raised the issue of high taxation and levies in the sector.