CAG report highlights financial lapses in telecom sector

The Comptroller and Auditor General (CAG) has identified significant shortcomings in the functioning of the Ministries of Communications and Electronics and Information Technology (MeitY). The report highlights critical lapses, including revenue losses, inadequate monitoring, and ineffective policy implementation in key projects.

The government's ambitious efforts to strengthen the country’s digital infrastructure may be impacted by the audit findings, which were tabled in Parliament on Tuesday. The report uncovers discrepancies in telecom revenue sharing and the incentive schemes for electronics production, raising concerns about governance and accountability.

Financial irregularities in telecom and digital infrastructure

The audit provides a detailed snapshot of financial inefficiencies and poor oversight in digital infrastructure and telecom regulation. Given the government’s commitment to achieving self-reliance in telecommunications, semiconductors, and digital services, the report’s findings raise serious questions about the execution and management of crucial initiatives.

According to the CAG, the government suffered a financial loss amounting to Rs 1,757.56 crore due to Bharat Sanchar Nigam Limited (BSNL), a state-owned telecom provider, failing to bill Reliance Jio for a period of ten years.

This loss was attributed to BSNL’s failure to enforce its Master Service Agreement (MSA) for the sharing of passive infrastructure with Reliance Jio Infocomm Ltd (RJIL) since May 2014.

However, the CAG report suggests that BSNL’s mismanagement extended beyond just unbilled revenue. The telecom provider also incurred losses of Rs 38.36 crore due to its failure to deduct the licence fee from payments received from Telecom Infrastructure Providers (TIPs). This oversight further exacerbated financial losses to the government exchequer.

Underbilling and revenue leakage in telecom operations

The audit highlighted that BSNL underbilled for infrastructure-sharing charges as it did not adhere to the agreed-upon MSA escalation provision with RJIL.This led to an additional revenue loss of approximately Rs 29 crore, including Goods and Services Tax (GST), which could have otherwise been recovered.

Furthermore, the Department of Telecommunications (DoT) was found to have failed in collecting revenue from telecom service providers. According to the CAG, a total of Rs 2,463.67 crore remained uncollected due to significant delays in revenue assessments.

Although these revenue assessments were intended to be completed within 12 months, the audit revealed that they took an average of 20 months to finalise. The inefficiency of the SARAS revenue management system, designed to streamline telecom tax collection, was also brought into question.

Concerns over underreporting and non-compliance in telecom revenue sharing 

The Indian telecom sector, which contributes around Rs 14,000 crore annually to the government under revenue-sharing agreements, has frequently been criticised for underreporting and non-compliance with financial regulations. The CAG report further underscores these concerns, shedding light on systemic flaws that enable financial mismanagement.

As this issue gains momentum, regulatory bodies and industry stakeholders will closely monitor the steps taken by telecom authorities, including BSNL and the government, to address these financial discrepancies. The effectiveness of corrective measures will be crucial in restoring public confidence and ensuring greater transparency in the sector.