Australia-India Strategic Research Fund

Digital Bharat Nidhi

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Context:

India’s Department of Telecommunications (DoT) released draft rules for the Digital Bharat Nidhi (DBN) on.

Digital Bharat Nidhi initiative

This initiative replaces the Universal Service Obligation Fund (USOF), addressing historical criticisms of fund underutilization and bureaucratic inefficiencies.

Funding Source: Digital Bharat Nidhi is financed through a 5% Universal Service Levy on telecom operators' Adjusted Gross Revenue (AGR). Contributions are channelled into the Consolidated Fund of India (CFI) before being allocated to the DBN for rural telecom infrastructure development.
Scope: DBN aims to extend telecom access to underserved rural, remote, and urban areas, promoting inclusive growth. Compared to USOF, DBN broadens its scope to include funding for R&D, technology innovation, and affordability enhancements.
Administrative Setup: The DoT will appoint an administrator to oversee DBN implementation and select implementers through competitive bidding. Detailed guidelines outline funding modalities such as full funding, co-funding, and market risk mitigation measures.

Need for the DBN ( Issues in USOF):

Underutilization of Funds: USOF has been criticised for significant underutilization of funds allocated to it. Example: Between 2017 and 2022, despite collecting Rs 41,740 crore from telecom operators, only Rs 30,213 crore (72%) was utilised. In some years, utilisation was even lower, indicating inefficiencies in fund deployment.
Bureaucratic Delays and Red Tape: Projects funded by USOF often face delays due to bureaucratic processes and approvals. This bureaucratic inertia hampers timely deployment of telecom infrastructure in rural and remote areas, defeating the fund's purpose.
Lack of Transparency and Accountability: There have been concerns about transparency in how funds are allocated and disbursed. Limited accountability mechanisms make it challenging to track the effectiveness of USOF investments and ensure funds reach intended beneficiaries.
Mismatch Between Fund Collection and Utilisation: The disparity between funds collected through the Universal Service Levy and actual expenditure raises questions about fund management. High collection rates contrasted with lower utilisation rates suggest inefficiencies in project selection, implementation, or monitoring.
Complexity in Project Implementation: USOF projects often require extensive planning and coordination with multiple stakeholders, leading to implementation complexities. Deploying telecom infrastructure in remote areas involves technical challenges such as terrain, connectivity issues, and infrastructure maintenance.
Inadequate Focus on Last-Mile Connectivity: Despite its mandate to enhance connectivity in underserved areas, USOF initiatives sometimes fail to address last-mile connectivity issues effectively.

About USOF

●USOF originated from Rowland Hill's postal reforms in 1837, later evolving to include telecommunications services under the Indian Telegraph (Amendment) Act, 2006.

●It Was created in 2003 to improve telecom services in parts of the country that don’t make a lot of money. It is funded by a 5% tax on telecom operators’ adjusted gross revenue (AGR).

Objective: USOF aims to provide affordable mobile and digital services in rural and remote areas, ensuring equitable access to knowledge and information for socio-economic development.

Administration: Managed by an Administrator appointed by the Central Government, USOF operates under the Department of Telecommunications (DoT), Ministry of Communications.

Functions:

●Facilitates the Telecom Technology Development Fund (TTDF) to support indigenous technology for affordable broadband and mobile services.

●Promotes research, standards development, and ecosystem building for telecom infrastructure in rural areas.

Conclusion:

The introduction of Digital Bharat Nidhi (DBN) marks a significant step towards addressing the longstanding challenges faced by the Universal Service Obligation Fund (USOF) in India. DBN not only aims to replace USOF but also seeks to revamp the approach towards enhancing rural telecom connectivity in the country.

Source:

https://indianexpress.com/article/explained/explained-economics/digital-bharat-nidhi-rural-telecom-9438127/

PRACTICE QUESTION

Q) Consider the following statements regarding the Digital Bharat Nidhi initiative:

It aims to replace the Universal Service Obligation Fund (USOF) to enhance rural telecom infrastructure development.
Digital Bharat Nidhi is financed through a levy on telecom operators' revenue.
The initiative focuses solely on funding research and development in the telecom sector.
An administrator appointed by the Department of Telecommunications (DoT) oversees the implementation and funding of Digital Bharat Nidhi.

Which of the statements above is/are correct?

A. Only 1 and 2 are correct.

B. Only 2 and 3 are correct.

C. Only 3 and 4 are correct.

D. Only 1, 2, and 4 are correct.

Answer: D. Only 1, 2, and 4 are correct.

Explanation:

●Statement 1 is Correct: Digital Bharat Nidhi is indeed intended to replace the Universal Service Obligation Fund (USOF). The USOF was criticized for underutilization of funds and bureaucratic inefficiencies in rural telecom infrastructure development. Digital Bharat Nidhi aims to address these shortcomings by broadening its scope and enhancing effectiveness in extending telecom services to underserved areas.

●Statement 2 is Correct: Digital Bharat Nidhi is financed through a levy on telecom operators' revenue. This levy, known as the Universal Service Levy, constitutes 5% of the Adjusted Gross Revenue (AGR) of telecom operators. The funds collected through this levy are deposited into the Consolidated Fund of India (CFI) and then allocated to Digital Bharat Nidhi for rural telecom infrastructure development.

●Statement 3 is Incorrect: While Digital Bharat Nidhi aims to enhance rural telecom infrastructure, it does not solely focus on funding research and development in the telecom sector. Instead, its scope includes extending telecom access to rural, remote, and urban underserved areas, promoting inclusive growth through enhanced connectivity.

●Statement 4 is Correct: An administrator appointed by the Department of Telecommunications (DoT) does oversee the implementation and funding modalities of Digital Bharat Nidhi. This administrator plays a crucial role in selecting implementers through competitive bidding and ensuring effective utilization of funds for rural telecom infrastructure projects.