New Delhi: The National Democratic Alliance (NDA) has discovered the ideal way to bring its ambitious financial inclusion plan and even more ambitious Digital India programme together—a scheme conceived by the United Progressive Alliance (UPA) in its final years, and which remained on paper, promising free mobile phones for rural households.

The Bharatiya Janata Party-led NDA has dusted off the ₹ 5,000 crore plan that involves giving a mobile phone to around 25 million households (which means it will cover around 100-125 million people).

This is the second scheme of the previous government that the NDA is adopting, after Aadhaar, the unique identity number that forms the basis of the Jan Dhan Yojana, the new government’s financial inclusion programme that seeks to open 75 million bank accounts.

Analysts say it is rare for a new government to not want to reinvent the wheel.

“Considering the low teledensity in rural areas and recognising that the mobile phone is an instrument of socio economic empowerment of citizens, it is proposed to launch a scheme funded by the Universal (Service) Obligation fund with an objective to provide affordable and quality telecom access in the form of a mobile phone," an internal note prepared by the department of telecommunications (DoT) for the cabinet, reviewed by Mint, said.

The Universal Service Obligation Fund gets a portion of the fees and taxes paid by India’s telecom service providers and it is meant to go towards providing telecom services in areas where it is economically unviable for the telcos to go themselves.

The proposal entails the provision of a mobile phone, provisionally valued at ₹ 1,200 per device, to an adult female in every household that is a beneficiary of the Mahatma Gandhi National Rural Employment Guarantee Act, selected by the state government.

The phone will be bundled with SMS and voice services and will be available to users for a nominal ₹ 300. The proposal also includes free recharges of ₹ 30 per month, for two years, enabling 30 minutes of calling, 30 SMSes and 30MB of data.

The connections will also get SMS-based information on education, health, agriculture and financial services.

The details are almost exactly the same as the scheme envisaged, but never launched, by the UPA government.

Currently, overall teledensity in the country is at 75%. Rural teledensity is around 41% while urban teledensity is at 147%.

This means that in rural areas, only two of five people have access to mobile phones. One of the key objectives of the National Telecom Policy 2012, the framework document based on which all telecom policy is to be made for the next five years, is to increase rural teledensity to 70% by 2017 and 100% by 2020.

The key reason behind the setting of this target was that every 10% increase in teledensity leads to around 1% increase in the gross domestic product of a developing country.

The Universal Service Obligation Fund currently has around ₹ 27,000 crore. This proposal expects to use ₹ 4,850 crore of those funds, while the bulk of the remaining funds are being used for the ₹ 20,000 crore national broadband plan to connect all 250,000 gram panchayats in the country with optical fibre for high-speed broadband.

Broadband, universal mobile connectivity, public Internet access, e-governance, the electronic delivery of services, the provision of information online, electronics manufacturing, using information technology to create jobs, and so-called early harvest programmes (including the use of Aadhaar numbers in attendance systems in government offices, the creation of messaging platforms, the provision of Wi-Fi in universities) together form Digital India, a programme that seeks to tranform India into a “digitally empowered knowledge society".

The free mobile phone scheme will be implemented by the state-owned Bharat Sanchar Nigam Ltd (BSNL).

While industry experts have welcomed the scheme, first proposed in 2012, more efficient private companies not being allowed to implement the scheme is being criticized.

“Conceptually it is good, but government needs to consider a number of issues including how best to leverage private telcos (other than completely depending on BSNL) who might have footprint in those rural and remote areas," Hemant Joshi, a partner at Deloitte Haskins and Sells Llp, said.

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