Why was Rs 33,683 crore rung out from crucial USO fund?

Government auditor CAG has flagged diversion of Rs 33,682.86 crore from the Universal Service Obligation (USO) fund, which was set up to provide basic telephone services in rural areas, for other purposes from 2002-03 to 2013-14. The Comptroller and Auditor General (CAG) in a report said against the total collection of universal access levy (UAL) of Rs 58,579.35 crore during 2002-03 to 2013-14, disbursement of subsidy of only Rs 24,896.49 crore was made from the fund during these periods.

“The remaining levy of Rs 33,682.86 crore was not transferred to the USO fund and utilised for the purposes other than the stated objectives for which the levy was meant,” the report, which was tabled in Parliament, said. The report said disbursement of <g data-gr-id="67">amount</g> also include the reimbursement of licence fees and spectrum charges to <g data-gr-id="61">loss making</g> state-run firm BSNL amounting to Rs 6,948.64 crore over the period 2002-03 to 2005-06 for fulfilling <g data-gr-id="68">rural</g> obligation. The Universal Service Obligation (USO) fund was set up in April 2002 and a statutory status was given to it. The fund is administered by Department of Telecom (DoT).

The fund is to be utilised for providing access to <g data-gr-id="47">basis</g> telegraph services, like provision of public telecommunication and information services and provision of household telephones in rural and remote areas, provision of broadband connectivity to villages and induction of new technological developments in telecom sector in rural areas. 

The resources for meeting USO fund were to be raised through a ‘universal access levy’ (UAL). CAG said the levy received towards USO is first credited to the consolidated fund of India and subsequently, the Centre credits the proceeds to the USO fund in public account of India from time to time, for being utilised exclusively towards the stated objectives and it is a non-lapsable fund. 

The auditor said the issue of understatement of balances of USO fund was commented upon in its report for year 2009-10, 2010-11, 2011-12 and 2012-13. “Despite CAG’s audit observation on USO fund during earlier years, it was noticed that DoT transferred only Rs 2,163.45 crore to the USO fund in the public account out of total receipts of Rs 7,896.39 crore towards UAL during 2013-14,” CAG said. The auditor said PAC in its recommendations contained in their fourteenth report (15th Lok Sabha 2009-10) had observed that government should not have any problem in crediting the full amount collected as UAL in USO fund especially when the proceeds were meant to be utilised exclusively for meeting universal service obligation. 

“Thus, <g data-gr-id="59">depiction</g> of ‘nil’ balance under USO fund in the Finance Accounts of the respective years was in contravention of PAC recommendations,” CAG added. CAG said DoT in its reply on the issue in November last year agreed upon the facts and figures but said <g data-gr-id="58">transfer</g> of entire collection under UAL to the USO fund does not happen automatically. DoT said the matter was taken up with Finance Ministry in 2012. It was submitted before the PAC that transfers to USO fund are made based on the requirement and ability of it to spend in any financial year and the unutilised funds kept in public account add to the liability of the government. 

Further, Finance Ministry had intimated (January 2014) that government had a commitment of Rs 20,100 crore for implementation of national optical fibre network (NOFN) to be financed by USO fund and as and when the scheme takes off and it is bound to provide funds. DoT said clause 9B of IT Act 2003 did not say all UAL proceeds would be credited to the Fund. 

“Further keeping money locked in <g data-gr-id="55">public</g> account may not be the most prudent way to utilise resources and in view of this, Finance Ministry was not committing any violation of <g data-gr-id="56">legal</g> provision,” DoT said. CAG, though did not accept the reply in view of the fact that being a specific purpose levy, the entire collection of levy, after initially being credited to consolidated fund should have been transferred to USO fund in public account. “After meeting the expenditure on the stated objectives under the scheme, the USO fund should transparently reflect the unutilised balances,” CAG said.