A deserved reprieve for PSUs and a lesson for Centre

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Jun 12, 2020

Centre’s desire to collect over Rs 4 lakh crore from PSUs citing Adjusted Gross Revenues (AGR) dues that Supreme Court had ordered telecom companies to pay met with a much deserved public reprimand on Thursday. These PSUs like GAIL and Oil India incidentally held telecom licences but telecom was not their core or a revenue earning business. The AGR dues judgment had accepted Centre’s AGR regime of 2003 which implied that telecom companies’ gross revenues would also include non-telecom revenues.

While SC said it was silent on non-telecom PSUs in its judgment it wanted to know who and under what authority the PSUs were also dragged into the AGR dues ambit. Equally important is a potential rethink on the part of SC to grant a longer rope for payment of dues to telecom players. The few remaining players in the sector are financially stressed while the telecom sector has undeniably emerged as the backbone of the country during this lockdown period. There is a good case even for pardoning the interest and penalties, which have accrued since 2003 and form a significant part of the dues, as a result of the long litigation. A strategic asset has to be nurtured, not financially weakened at a time when they should be making 5G investments.

Government has been under fiscal pressures for a while now and clever-by-half bureaucrats who conjured up the PSU dues on tenuous grounds aren’t helping matters. Centre needs to be careful of the signals it sends to investors. Such actions will worry them no end when we are trying to attract businesses moving out of China. The AGR dues case, from start to end, was emblematic of what went wrong in India these two decades. Policy uncertainty and litigative tangles continued from one government to the next. Today the telecom sector is a shadow of its former self when many global players entered the Indian market with great hopes.

SC asks DoT to reconsider Rs 4 lakh crore claim on PSUs, says demand impermissible


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