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Infrastructure Development



Until 1994 telecommunications services were a Govt. monopoly. Private sector participation was allowed in basic services as part of the National Telecom Policy announced in 1994.

An independent regulatory authority called Telecom Regulatory Authority of India (TRAI) was set up in 1997. The regulatory mechanism has been further strengthened through the TRAI (Amendment) Act, 2000 wherein the role, functions and powers of TRAI vis-a-vis Govt. have been clearly defined.

A new policy for Internet Service Providers (ISPs) was announced in 1998 opening the area to the private sector providers. The policy was promotional in nature.

New Telecom Policy was announced in March, 1999.

National Long Distance Service was opened to competition in Aug. 2000.

Department of Telecom Services(DTS) to be corporatised from 1st Oct.2000;the company to be called Bharat Sanchar Nigam Limited

An outlay of Rs.46442.04 crore was approved for the telecom sector to be financed basically by internal and extra budgetary resources.

Utilization is expected to be about 80% of the outlay approved for the first three years. The shortfall is basically on account of low utilization by MTNL and VSNL. No budgetary support was provided except for regulatory bodies.

The major targets fixed included provision of 237 lakh DELs including 52 lakh by the private sector, 2.39 lakh VPTs and laying optical fibre of 1.4 lakh route kms.

The physical performance of the public sector i.e. Deptt. of Telecom and MTNL during the first three years has been very encouraging. The Ninth Plan target of providing one PCO for every 500 persons in urban areas has already been achieved. The actual performance was higher than the targets fixed except VPTs.

Private sector participation in the telecom services, especially basic services, did not take off as initially expected because of various impediments. Several policy changes have been announced by the Govt. removing these constraints. It is hoped that private sector licensees will now be able to expand supply of services.

To offset the shortfall in the performance of private sector in basic telecom services, the Ninth Plan target for the public sector for DELs is proposed to be increased to 222.70 lakh and for the VPTs to 2.79 lakh.

About 62 per cent of the total of 6.07 lakh villages have been provided telecom connectivity through Village Public Telephones(VPTs) as on 31.3.2000. Government is committed to ensure connectivity to the remaining villages by 2002. Govt. sector would be servicing about 5.51 lakh VPTs by March 2002 involving an annual subsidy of about Rs.1700 crore.

The major policy issues that still need to be addressed in the telecom sector are :

  • Tariff re-balancing with the objectives of cost based prices, transparency of subsidies and better targeting and help operational efficiency of the operator.
  • Opening of Internet telephony.
  • Convergence of services and single licence regime.
  • Ensuring full functional freedom to Bharat Sanchar Nigam Limited i.e. corporatised DoT

Postal sector

Modernization of postal operations and expansion of network in the uncovered areas are the two thrust areas of the Ninth Plan.

An outlay of Rs.507.25 Crore was approved for the Ninth Plan funded entirely through budgetary support.

The utilization during the first three years was about 43%.

The major targets envisaged included opening of 250 departmental sub post offices, 2500 rural post offices (EDBOs), 2000 satellite based money transfer systems, 170 V-SATs and two automatic mail processing centres.

The physical performance during the first three years has been satisfactory.

The Panchayat Sanchar Seva Yojana has been revived to provide postal services in the rural areas.

The major policy issues are:

  • Element of subsidy in postal services is quite high leading to huge postal deficit.
  • Rationalization required both in terms of mix of services and pricing.
  • The Indian Post Office Act, 1898 is quite archaic and need to be replaced by a modern forward looking Act to meet the new and emerging requirements.

Information Technology

Making India a global IT superpower in the next ten years is one of the major items of agenda under the Special Action Plan of Prime Minister.

The role of the Govt. is that of a facilitator. Private sector contributes more than 80% of the electronics IT industry in the country.

The major targets envisaged for the Ninth Plan :

  • Production : Rs.138350 crore
  • Exports : Rs.48930 crore
  • Computer penetration : two per thousand

The performance of the IT industry during the first three years has been outstanding. It recorded an average growth rate of about 25% per annum.

Software exports recorded an impressive growth of about 66 percent per annum during the first three years. The growth of the hardware exports, however, has been slow around 11 percent. Ninth Plan export target is likely to be achieved.

IT enabled services have immense potential of growth – both in terms of income generation and employment. E-commerce is expected to grow to Rs.15000 crore by 2002.

The major initiatives taken by the Govt. include:

  • Setting up of a new Ministry of Information Technology.
  • Setting up of Task Force on Human Resources Development in IT.
  • Creation of IT Venture Capital Fund of Rs 100 crore.
  • Upgradation of Education and Research Network(ERNET) connecting all Universities and RECs through high speed network..
  • All RECs to be upgraded to the level of IITs.
  • Setting up of IIITs in various states.
  • Setting up of Community Information Centres (CICs) in 486 Blocks in NE Region including Sikkim.
  • Enactment of a comprehensive law called IT Act 2000.

States Governments of Andhra Pradesh., Karnataka, Maharastra and Gujarat have taken major initiatives for promotion of IT and E-governance. Other states are also gearing up to take advantages of IT revolution.

The major policy issues that need to be addressed in the sector are:

  • Availability of adequate bandwidth and easy accessibility.
  • Evolving appropriate policy and strategy for accelerated growth of hardware sector.
  • Strengthening of Internet infrastructure in the country including providing at least 300 GB of Internet bandwidth by 2005.
  • Encouragement of IT development in Indian languages to increase PC penetration and IT awareness in the society.
  • Full use of the potential of E-governance.