Telecom package could dent sector inflows by Rs 26K cr

New Delhi, Sep 16 (IANS) Government's telecom sector package could put pressure of country's fiscal health in FY22 with expectation of wider slippages on the deficit.

The government is targeting fiscal deficit of 6.8 per cent of GDP in FY22, a big improvement over previous year when fiscal deficit shot up to 9.3 per cent in Covid affected economy.

However, with telecom package offering deferment of AGR and spectrum charge payment by four years, the possible revenue shortfall projected from communication services in FY22 could be as high as Rs 26,000 crore. This would add up to projected deficit.

Under the telecom package announced on Wednesday, the government is deferring non tax revenues at Rs 46,000 crore per year for four years starting from FY2023. This comprises Rs 14,000 crore related to the moratorium on AGR dues and Rs 32,000 crore from the moratorium on spectrum dues.

Notably, FY2022 was already under moratorium for spectrum dues, so the net impact for this year is limited to Rs 14,000 crore this year.

However, the GoI had budgeted for inflows of nearly Rs 54,000 crore from other communication services for the current year, presumably boosted by the expectation of fresh auction inflows.

"We now assess the inflows from the telecom sector into the GoI's FY2022 non tax revenues to be limited to Rs 28,000 crore, trailing the budgeted Rs 54,000 core, which will modestly widen its fiscal deficit," said Aditi Nayar, Chief Economist, ICRA Limited.

The Union Cabinet on Wednesday approved much-anticipated relief and reform measures for the stressed telecom sector.

Among several decisions, the Cabinet has approved a four-year moratorium on all dues by telecom operators including the adjusted gross revenue (AGR), however, those operators availing the moratorium will have to pay interest of "MCLR+2 per cent".

It has also approved the change in the AGR definition and now non-telecom revenue will not be calculated under AGR, prospectively.

In another major move, the Cabinet has allowed 100 per cent FDI in telecom under the automatic route.