1. The Centre’s relief to telcos can only be the first step in efforts to boost the stressed sector
Context: The recently annouced relief-cum-reforms package for the financially stressed telecom sector, though much needed, but is at best only likely to delay the inevitable.
The relief given is as follows:
Rationalization of Adjusted Gross Revenue: Non-telecom revenue will be excluded on prospective basis from the definition of AGR.
Bank Guarantees (BGs) rationalized:
Huge reduction in BG requirements. No requirements for multiple BGs in different Licenced Service Areas (LSAs) regions in the country. Instead, One BG will be enough.
For Auctions held henceforth: no BGs will be required to secure instalment payments. Industry has matured and the past practice of BG is no longer required.
Interest rates rationalized/ Penalties removed: From 1st October, 2021, Delayed payments of License Fee (LF)/Spectrum Usage Charge (SUC) will attract interest rate of SBI’s MCLR plus 2% instead of MCLR plus 4%; interest compounded annually instead of monthly; penalty and interest on penalty removed.
Spectrum Tenure: In future Auctions, tenure of spectrum increased from 20 to 30 years.
Surrender of spectrum will be permitted after 10 years for spectrum acquired in the future auctions.
No Spectrum Usage Charge (SUC) for spectrum acquired in future spectrum auctions.
Spectrum sharing encouraged- additional SUC of 0.5% for spectrum sharing removed.
100% Foreign Direct Investment (FDI) under automatic route permitted in Telecom Sector.
Auction calendar fixed - Spectrum auctions to be normally held in the last quarter of every financial year.
Ease of doing business promoted - cumbersome requirement of licenses under 1953 Customs Notification for wireless equipment removed. Replaced with self-declaration.
Know Your Customers (KYC) reforms: Self-KYC (App based) permitted. E-KYC rate revised to only One Rupee. Shifting from Prepaid to Post-paid and vice-versa will not require fresh KYC.
Digitalization of paperwork: Paper Customer Acquisition Forms (CAF) will be replaced by digital storage of data. Nearly 300-400 crore paper CAFs lying in various warehouses of TSPs will not be required. Warehouse audit of CAF will not be required.
For investment into network: SACFA clearance for telecom towers eased. DOT will accept data on a portal based on self-declaration basis. Portals of other Agencies (such as Civil Aviation) will be linked with DOT Portal.
Addressing Liquidity requirements of Telecom Service Providers(TSPs)
Moratorium/Deferment of AGR Dues payment: of upto 4 years in annual payments of dues arising out of the AGR judgement as well as the past spectrum purchase, with however, by protecting the Net Present Value (NPV) of the due amounts being protected.
Interest payment by Equity: Option to the TSPs to pay the interest amount arising due to the said deferment of payment by way of equity.
Restructuring options: Government can convert the due amount pertaining to the said deferred payment by way of equity at the end of the Moratorium/Deferment period, guidelines for which will be finalized by the Ministry of Finance.
Importance of the Relief:
A tacit acknowledgment of the extent of stress in the sector.
Ripple effect: It has far-reaching economic consequences of protracted distress in the industry.
Importance of 4 year moratorium: It is expected to ease the immediate financial pressure on the telcos, especially at Vodafone Idea and Bharti Airtel.
Saving a Giant: VI which is a venture created by the merger of the Indian unit of the U.K.-based Vodafone Group Plc and Kumar Mangalam Birla’s erstwhile Idea Cellular Ltd. had deferred spectrum payment obligations and AGR liabilities that exceeded ₹1.68-lakh crore as of June 30.
Addressing Pointless litigation: Government has sought to address several anomalies in the policy regime including the definition of AGR that had led to the large build-up of dues and protracted and ultimately pointless litigation.
Trying to infuse rationality: Non-telecom revenue will hereafter be excluded from the AGR, a long-standing demand from the telcos.
Short term measure: At least for now, it will relieve the burden of finding the funds to service these liabilities at the loss-making telco, giving it the space to focus on continuing to provide vital telecom services. However, the woes at Vodafone Idea are deeper and symptomatic of the broader industry-wide maladies that have pared the once more-than-dozen-strong field to just three private players and one struggling state-owned company.
Anti-competitive practices: Reliance Jio's tariffs triggered price war that depressed average revenue per user and bled most legacy telcos operationally into the red. This still being felt by the surviving operators. The issue of a floor price is one among many that the latest reforms completely skirt.
Revenue demand still high: The telcos would also not have to pay any spectrum usage charge for airwaves acquired in future auctions, could share spectrum without incurring any additional cost, and hold the airwaves acquired at an auction for 30 years instead of 20.
No investment: Both Vodafone Group CEO Nick Read and Mr. Birla categorically telling analysts that the firm would not be investing any additional equity into India
Conclusion: the Centre’s relief may be too little, too late.
Expected Question: Critically analyse the recent initiatives taken by the government in infusing sustainability in the Telecom sector in India. (250 Words)
2. The nuances of the unorganised workers’ identity are complex which portal registration may not be able to capture
Context: On August 26, 2021, the Ministry of Labour and Employment (MOLE) launched the E-Shram, the web portal for creating a National Database of Unorganized Workers (NDUW), which will be seeded with Aadhaar.
Features of e-Shram Portal:
Aim: It seeks to register an estimated 398-400 million unorganised workers and to issue an E-Shram card. These include construction labourers, migrant workforce, street vendors, and domestic workers, among others.
e-Shram card: It assigns a 12 digit unique number to each labour.
Benefits: Rs 2.0 Lakh on death or permanent disability and Rs 1.0 lakh on partial disability.
Supreme Court recently directed the Government to complete the registration process of unorganized workers so that they can avail the welfare benefits given under various government schemes.
It helps in implementation of the Unorganised Workers’ Social Security Act in 2008; It is a decade late and a much needed initiative.
Implementation: Government in States/UTs will conduct registration of unorganised workers across the country.
Real work starts now - A long process
Registering each worker will be a long-drawn process.
Slow Pace: Currently, only 0.61 million workers have been registered, considering the estimated 380 million workers as the universe of registration.
Informalization: the novel coronavirus pandemic has pushed lakhs of workers into informality and the estimate also depends on the assumptions used for estimation — 6.33 million workers have to be registered for completion of registration in 60 days, and 4.2 million workers for 90 days.
The Government has not mentioned a gestation period to assess its strategy and efficiency.
Long term benefit: Workers stand to gain by registration in the medium to long run. The main point of attraction is the benefits they stand to gain during normal and crisis-ridden periods.
Formalization: The workers would come under the government monitoring.
Social Security to informal sector: The apparent productivity gains arising out of social security assurances to these workers is a moot point. The existing social security code(SSC) is exclusionary as ESC and EPF benefits are applicable only to those employed in establishments employing 10 or 20 workers, respectively.
Visibility: E-Shram is a vital system to provide hitherto invisible workers much-needed visibility.
Efficient and leakage-less delivery of benefits: Ex - One-Nation-One-Ration Card (ONOR), E-Shram Card (especially bank account seeded) and the Election Commission Card.
Data security, other issues: potential abuse especially when it is a mega-sized database. The central government would have to share data with State governments whose data security capacities vary. There are also media reports pointing out the absence of a national architecture relating to data security.
No incentive for Small employers: why should small employers be incentivised to ask or require their workers to register even though the government reportedly requires them mandatorily to register their workers.
Can't take Penal action: While the Government can appeal to them, any penal measure will hurt the ease of doing business.
Definitional Issues/Many exclusions: There are several issues concerning the eligibility of persons to register. By excluding workers covered by EPF and ESI, lakhs of contract and fixed-term contract(FTC) workers will be excluded from the universe of UW. Under the Social Security Code (SSC), hazardous establishments employing even a single worker will have to be covered under the ESI, which means these workers also will be excluded.
Age-based discrimination: The NDUW excludes millions of workers aged over 59 from its ambit, which constitutes age discrimination. Given the frugal or no social security for them, their exclusion will hurt their welfare.
Technical Challenges: Many workers will not have an Aadhaar-seeded mobile or even a smartphone. Aadhaar-seeding is a controversial issue with political overtones, especially in the North-eastern regions.
Complex identities: The very identity of unorganised workers is ever-changing. Many are circular migrant workers and they quickly, even unpredictably, move from one trade to another. Many others perform formal and informal work as some during non-office hours may belong to the gig economy, for example as an Uber taxi or a Swiggy employee. They straddle formal and informal sectors.
Problem related to gig-workers: Even though MOLE has included gig workers in this process, it is legally unclear whether the gig/platform worker can be classified first as a worker at all (the other three Labour Codes do not include these workers), and second as organised or unorganised workers — the definition of an “unorganised worker” in the Social Security Code does not specifically include them, unless they are declared ‘self-employed’ or ‘wage workers’.
Other impediments: The central government will have to depend on the State governments for this project to be successful. In many States, the social dialogue with the stakeholders especially is rather weak or non-existent. The success of the project depends on the involvement of a variety of stakeholders apart from trade unions, massive and innovative dissemination exercises involving multiple media outlets of various languages, the holding of camps on demand by the stakeholders and on their own by the Government, efficiency of the resolution of grievance redress mechanisms, micro-level operations, etc.
Corruption: There is also the concern of corruption as middle-service agencies such as Internet providers might charge exorbitant charges to register and print the E-Shram cards. Therefore, the involvement of surveillance agencies is crucial. More importantly, the Government must publish statistics at the national and the regional levels of the registrations to assess the registration system’s efficiency.
Expected Question: Enumerate the various schemes taken up by the government to support informal economy in India. (150 Words)