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Cabinet approves Rs1250-cr USOP support to BSNL for rural telephony

21 September 2016

The union cabinet today approved a proposal to extend subsidy support of Rs1,250 crore to Bharat Sanchar Nigam Limited (BSNL) from Universal Service Obligation Fund (USOF), as compensation for deficit incurred by BSNL in operating the rural wire-line connections installed prior to 1 April 2002. 

The eligible rural wire-line connections installed prior to 1 April 2002 is estimated at 3.23 million across India as of 31 March 2014.

The cabinet also approved that the above subsidy support would be the last and final payment and no further request from BSNL for financial/subsidy support from USOF on this count shall be considered.

In order to make BSNL eligible for subsidy funding on nomination basis from USOF, amendment will be required in Rule 526 of the Indian Telegraph Rules (ITRs), 1951. It stipulates that the criteria for selection of Universal Service Providers shall be made by bidding process from amongst eligible entities for implementation of USOF schemes. Corresponding amendment in Rule 525 will also be required.

Full/lump-sum amount of Rs1,250 crore shall be disbursed, consequent to necessary amendment of the ITRs and signing of USOF agreement with BSNL. Utilisation certificate of' the USOF subsidy disbursed towards operation and maintenance of the rural wire-line connections would be submitted by BSNL.

USOF since its inception in 2002 has been providing subsidy for BSNL for the rural wire line connections installed prior to 1.4.2002. A total of Rs. 8,692 crore has been extended as USOF subsidy support till date, for the rural wire-line connections, installed by BSNL prior to 1.4.2002.

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