FDI not to boost teledensity: Left

The Left parties, which have opposed the raising of the foreign direct investment (FDI) cap in the telecom sector, in a subtle shift of stand have turned it into an argument for expanding rural telephony services.

The higher FDI inflow in the telecom sector is not crucial to expanding teledensity as argued by the government, they say.

Initially, the Left parties' arguments were guided by a security threat and to blunt a corporate campaign by private sector telecom companies to legalise their holding, which was far in excess of the stipulated 49 per cent.

The latest Left note to the government makes two significant points. Raising the FDI limit has "little relevance to the key issues of improving coverage and rural telephony," it says.

An article titled "Raising FDI limits in telecom or rewarding law breakers?" in the latest issue of the CPI(M) weekly People's Democracy, says: "If we look at the priorities that the telecom sector should have, we would have thought the priority should be for expanding telecom network coverage and correcting the growing rural-urban telecom divide."

The Left note says the only company pursuing rural telephony is state-owned Bharat Sanchar Nigam Ltd (BSNL). "Some private operators are not paying BSNL the Trai-mandated access defect charges, thus hampering its ability to provide rural telephony." Both BSNL and MTNL have filed cases against a telecom operator for this.

On the access defect charges issue, CPI(M) politburo member Prakash Karat said: "BSNL is being cheated of the money due to it. The government should take a clear stand. Our MPs will be taking the issue up in the winter session of Parliament." The Left has also agreed to the merger of BSNL and MTNL.

The Left parties discount the finance ministry's claim that unless FDI limits were lifted, Rs 128,000 crore investment needed for increasing teledensity could not be met. Private and public sector telecom companies have enough surplus to fund expansion of the telecom network, the Left note says.

It says BSNL alone has cumulative outlay in gross fixed assets of Rs 130,000 crore (2004 March), which is growing at a rate of 15 per cent. "If we take this 15 per cent figure and see BSNL's projected investment for the next five years, it is of the order of Rs 130,000 crore," the note says.