Congress hands off on cell scheme?

It was meant to push the right buttons for the UPA Government whose political fortunes are ebbing and was likely to have been announced by Prime Minister Manmohan Singh in his Independence Day speech as a wake-up call. Now, it is unlikely to happen. The Prime Minister is under bureaucratic pressure not to plunge into populist adventurism which may backfire. ‘Har Hath Mein Phone (a cellphone in every hand)’ scheme, to win the favour of India’s six million BPL families, would cost the public exchequer Rs 7,000 crore and is learnt to have been hung up, courtesy political objections and logistical challenges. It would also have been a lifesaver for Indian cellphone operators who are hurting under the new fees being charged by the government and declining profits. Conceived by the Planning Commission, headed by Montek Singh Ahluwalia, the scheme was to also provide 200 minutes of free local talk time. The pitch was that it would provide the UPA with an opportunity to open a direct line of communication with a sizeable section of the population that is politically active.

Political Ringtones: However, both the Finance Ministry and Telecom Ministry strongly oppose it. Finance Minister P Chidambaram reportedly feels that such a scheme could backfire because of its “consumerist connotations.” The telecom ministry has questioned how the Universal Service Obligation Fund meant for increasing teledensity in rural areas could be used for such a populist measure. “Post the 2G scam, we are extra cautious in everything to do with politics,’’ said a source with the telecom ministry. Meanwhile, the Congress is not convinced about its vote gathering potential. Sources said a senior minister in Sonia Gandhi’s immediate power circle is also learnt to have played a crucial role in puncturing the scheme. “Anybody with even slight political sense would not go for a cellphone scheme to win votes. If it were doles like food subsidy or loan waivers, it would have made some sense. But this kind of a flamboyant scheme will not strike a chord with the aam aadmi, if that is its intention,’’ said a source close to the Government. The cellphone scheme has attracted also criticism from UPA allies, including the RJD. “The poor want two square meals, not mobile phones. The Centre should pay attention to hungry stomachs,” RJD MP and former rural Development minister Raghuvansh Prasad Singh said.

Logistics Stumps All:  Until today, the government hasn’t been able to conclusively decide on what constitutes a BPL family. The cellphone scheme doesn’t take into account the logistics of distributing 6 million phones to the poor, and how it will interact with state governments on this issue. The possibility of corruption is also learnt to have worked against the scheme. “It is easier to have these kind of schemes in states. In a national scheme, chances of corruption are higher,’’ said the source.

Cell Crisis: The scheme would have benefited India’s ailing cell hone operators whose bottomlines have been sliding as margins shrunk to increased competition. Bharti Airtel, India’s top telecom carrier, posted its 10th straight quarter of profit decline. Price wars and the expensive 3G auction in 2010 pushed most of them into a corner, and only Vodafone, one of the Big Four—Bharti Airtel, Vodafone, Reliance and Idea—along with government carriers like MTNL and BSNL barely recouped costs of capital in spite of record consumer additions. In 2011, they reported lower profits for three months that ended March 2011. Overall, the minutes of usage in the country has also declined to 13 per cent on a year on year basis.  While the Average Revenue Per User (APRU) has also gone down to Rs 100 in 2012 from Rs 131 a year ago.

“I am not aware of any such development I have also read it in papers only,’’ a PMO official told The Sunday Standard. “Those who are behind the scheme may still push for it as lots of vested interests are involved. But one thing is for sure. It will not be part of the Independence Day speech,’’ said the source. It is learnt that the Planning Commission hasn’t given up.

- Sunday Standard