Saturday, May 19, 2012


Diversion of USO Fund
The Universal Service Obligation Fund (USOF) was established with the fundamental objective of providing access to ‘basic’ telegraph services to people in the rural and remote areas at affordable and reasonable prices. It provides subsidy support for enabling access to all types of telegraph services including mobile services, broadband connectivity and creation of infrastructure like OFC in rural and remote areas.It also provides subsidy support to eligible operators for operational sustainability of Rural Wireline Household Direct Exchange Lines (DELs) installed prior to 01.04.2002, and financial support for creation of National Optical Fibre Network (NOFN) for extending the broadband connectivity up to all gram panchayats or villages by bridging the gaps in the aggregation layer through laying of fibre and installation of end equipment’s or terminals.
In their Fourteenth Report (15th Lok Sabha), the Public Account Committee  revealed lapses on the part of Government on crediting the full amount collected as USL, which was five per cent of the Adjusted Gross Revenue (AGR) earned by all the operators, under various licences, to the USO Fund, during the years 2002-07. The Committee desired that the Department of Telecommunications should make efforts to ensure that the proceeds to the USO Fund were not diverted under any circumstances, even temporarily for purposes other than those for which the funds were collected.
On the forty-ninth Report on Action Taken by the Government on the Observations/Recommendations of the Public Accounts Committee contained in their Fourteenth Report (15th Lok Sabha) on Administration of Universal Service Obligation (USO) Fund, the Committee noted.
“…the Ministry of Finance, who have been jointly entrusted with the responsibility of finalizing the amount of be transferred to the USO Fund as per the Cabinet direction, have stated that as the Government is committed to finance various flagship programmes, the resources cannot be locked by simply lodging them in the Public Accounts of India. The Committee do not approve of the Ministry of Finance diverting the funds exclusively meant for USO activities to otherprogrammes…...”
   In compliance with the recommendations / observations of the PAC, the matter had been taken up with Ministry of Finance. The Ministry of Finance intimated on 3rd May, 2012 as below:
(i)           In terms of Indian Telegraph (Amendment) Act, 2003, Government may credit such proceeds to the Universal Service Obligation Fund from time to time for being utilized exclusively for meeting the Universal Service Obligation. Keeping this in view, funds are being provided in the Demands for Grants of Department of Telecommunications for transfer to USOF. Further, provisions for transfer to USOF are made based on the requirement and ability of the Department to spend in any financial year. This practice is being followed over the years. It may be noted that the unutilized funds kept in the Public Account add to the liability of the Government. It may also be recalled that while approving the amendment to Indian Telegraph Act,1885, Cabinet has directed that Department of Telecommunications to consult Ministry of Finance while finalizing the amount to be transferred to USOF:
(ii)          Department of Telecommunications has, recently, obtained the approval of Cabinet for implementation of a new scheme called ‘National Optical Fiber Network’ (NOFN) for proving broadband connectivity to Panchayats with an estimated cost of Rs. 20,000 Crore by utilizing the USOF. Thus, the bulk of the accruals to USOF over the years would be utilized in financing and implementing NOFN. 

        This information was given by the Minister of State for            Communications & Information Technology ShriMilind Deora in a written reply in Rajya Sabha today.

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