"PULL POLICY" FOR GROWTH OF TELECOMMUNICATIONS IN RURAL AREAS - A CASE STUDY OF INDIAN TELECOM"
Ms Anjali Nigam, MS University, Vadodara,
Ajit Nigam, Indian Institute of Technology, Guwahati
(E mail address: ajitkumarnigam@yahoo.com)

ABSTRACT

With the integration of the Indian economy with the global economy after liberalisation, the need for extensive and efficient telecommunications network started being felt. Telecommunications was unfortunately not perceived as one of the key infrastructures for economic development, during the formative years of the Indian economy. The persistent low level of investment and low priority given to telecommunications adversely affected the sector in terms of quantity, quality, and range of services. Government realised the need of Private Sector participation in the Telecom industry, without which it was not possible to meet the aspirations of expanding Businesses in liberalised economy.

The involvement of private sector necessitated formulation of policy framework. The sustainability of infrastructure projects depends on the success of Policy Planners in implementing a strong techno-Financial and techno-Legal regime based on viable rates of return for private sector participation that should support each other, so that a conducive and sustainable environment is maintained for constant investments in the sector.

The Indian Telecommunications Industry operated on the guidelines of the Indian Telegraph Act 1885. India did not have any comprehensive telecom policy, which was much required for private sector involvement in the sector. India's first Telecom Policy was formulated in 1994, i.e. 'National Telecom Policy 1994'.Even though the intent was there in this policy, the content was not there and hence even though the urban network improved the rural teledensity was way behind. It is important to improve the cross sectional teledensity because a reliable telecom infrastructure encourages decentralisation of economic activity and thus does not concentrate development in urban areas only. At micro-level, the welfare implications of telecom investment are evident. NTP'99 was a much better policy in terms of 'Contents and Intent'. But again, the policy was a 'Push policy rather than a Pull Policy'

Existing policy framework was not able to convert Government's intent into action as the contents of policy were not enough to pull investors towards rural and remote areas. In absence of adequate policy provisions and framework either the regulation of providing 10% of infrastructure in rural areas remained on paper or circumvented through various innovative and not so innovative ways.

Authors' analyse the effect of policy framework and concludes that the flaw lies in policy design. This is the main cause for asymmetric development of Telecom sector in India. Authors also suggest a point based incentive system to leverage growth in rural sector. The point system could be based on basic standard of quantity, quality, penetration and remoteness of area. This will establish a linkage between the business of service provider in urban area and business in rural /remote areas. The Composite Points (CP) earned in the scale of -10 to +10 in rural and remote areas would determine the revenue sharing ratio of the service provider based on a predetermined formula.