INSUBCONTINENT EXCLUSIVE:
Union Cabinet has actually authorized moratorium plan for cash strapped telecom companiesAmid a slew of reforms for the telecom sector, the
Union Cabinet on Wednesday cleared a much waited for relief package for the stressed sector which entails relaxation to mobile business on
payment of their long impressive adjusted gross revenue (AGR) fees by providing a four-year moratorium, which will enter into impact from
The bundle will come as a huge relief to companies like Vodafone Concept, that owe a big total up to the government in statutory dues.The
four year moratorium however is safeguarded by an interest element, which the telecom companies will need to pay right from the very first
day of the start of the period (October 1) at the rate of MCLR plus two per cent.The interest part will guarantee continual circulation of
income into federal government's coffers and this amount will be utilized for creation of indigenous 5G facilities in the country
Government's revenue needs to be protected, so telecom business will pay interest on moratorium at MCLR plus two percent
During the period of the moratorium, this interest component will help set up telecom infrastructure in the country, Telecommunication
Minister Ashwini Vaishnaw informed media individuals after the Cabinet meeting.The moratorium will help in reducing problem of both telecom
business as well as banks, the minister said
Banks' balance sheet direct exposure will be considerably lowered and both banking and telecom sectors will witness cash flow enhancement
which will be utilized for setting up 5G infrastructure setup, Mr Vaishnaw said.When asked about the size of the moratorium, the minister
said, the bundle is revenue neutral to the government and therefore we can not put a total up to it
He notified that this choice was one amongst the nine structural reforms and five procedural reforms for the sector, which were cleared
today by the Cabinet.The package will signal a service to the long standing financial crunch being dealt with by telecom companies and their
inability to pay dues worth thousand of crores of rupees in terms of spectrum fees, to the government.The choice by the Cabinet has come
simply weeks after Kumar Mangalam Birla resigned as chairman of the cash starved Vodafone Idea.The business had actually long been looking
for federal government's intervention in regards to bailing it out financially.Even Sunil Bharti Mittal, chairman of Airtel, the nation's
second biggest telecom business, had actually looked for federal government's help.He had actually said that a major chunk of the telecom
industry's profits enters paying federal government taxes.In another significant choice, the Cabinet cleared 100 percent foreign direct
investment (FDI) in the telecom sector through automated path, which will encourage greater participation of players.However all safeguards
will apply, Mr Vaishnaw said.
