Cabinet clears Rs 1,250-cr subsidy for BSNL for rural phones

State-run telecom firm has asked the govt to provide Rs 2,000 crore to support rural wireline connections

The Cabinet on Wednesday cleared the long-pending compensation of Rs 1,250 crore for public sector telecom company BSNL to support rural landline connections installed before April 1, 2002.

"The Cabinet approves subsidy of Rs 1,250 crore to BSNL as compensation for deficit incurred by BSNL in operating rural wire-line connections," said Frank Noronha, the government's Principal Spokesperson, on Twitter.

The BSNL subsidy support will be given from the Universal Service Obligation Fund for the rural connections installed prior to 1 April, 2002, he added.

The state-run telecom firm has asked the government to provide Rs 2,000 crore to support rural wireline connections.

On the basis of the submission of BSNL and the detailed information in respect of working rural wire-line connections installed before April 1, 2002, the deficit per rural wire-line connection was estimated at Rs 4,876 for 2011-12.

Accordingly, the deficit from the rural wire-line connections installed before April 1, 2002 for 2011-12 and 2012-13 were estimated at Rs 1,593 crore and Rs 1,265 crore respectively.

The Department of Telecom had paid subsidy for these connections to BSNL up to July 17, 2011.

Based on the trend at that point, regulator Trai estimated subsidy of Rs 1,500 crore for 2011-12 with effect from July 17, 2011 and Rs 1,250 crore for the subsequent year effective July 18, 2012.

BSNL has received Rs 1,500 crore subsidy and the Cabinet approved the pending amount of Rs 1,250 crore on Wednesday.