Month: May 2024

The Ballooning USO Fund

Universal Access Levy amount available for Universal Service Obligation

Source: https://usof.gov.in/en/fund-status

The other day I was examining a PhD proposal that was looking at bridging the digital divide,
when I wondered what had happened to India’s universal service obligation (USO) fund.
Sure enough, it was still around and quite easy to find online, but what I found surprised me
a little.

The USO Fund was created to support the Universal Service Support Policy 2002, to ensure
telecom access to all. It came into being in 2003, through the Indian Telegraph (Amendment)
Act, 2003. The revenue for the USO Fund is raised through a ‘Universal Access Levy’
(UAL), which is currently 5% of the Adjusted Gross Revenue earned by all the operators.
The USO Fund is an attached office of the Department of Telecommunications (DoT),
Ministry of Communications. The Administrator, USO Fund is appointed by the Central
Government.

Not only was the fund there, as the figure shows, it had, as of the end of last financial year, a
balance of ₹ 79,638 crore, i.e., almost $ 10 billion. In the last ten years, the balance in the
fund has increased over 2.3 times. Since its inception, it has collected about $ 20 billion (at
current exchange rates) and disbursed about half of it. However, as shown in the figure, in
recent years, disbursements from the USO Fund has been between 5% and 10% of the
available balance. In 2022-23, it received ₹12,694 crore but spent only ₹3500 crore. Last
year, it received ₹18188 crore and spent ₹7676 crore, i.e., it is spending less than the
interest it might have earned on its accumulated funds (which, surprisingly do not seem to
earn interest!).

This appears odd given the objective of spreading digital public infrastructure and becoming
a trillion dollar digital economy in three years. It is not that there are no projects, there are
many (https://usof.gov.in/en/ongoing-schemes). So, is the UAL excessive compared to the
requirements or is there a different explanation? Is the Administrator worried that disbursing

funds to the two major private telecom operators would attract undesirable attention?
Whatever be the reason, it is time rescue the USO Fund from its current obscurity.

(Picture Credit: Pushpa Pathak)

On 13th February 1979, I arrived in Dhampur Town, District Bijnor, Uttar Pradesh, to start my Ph.D. thesis field work. My research focus was on agro-industries as drivers of economic growth of a small town as well as of regional-rural transformation. Hence, I had selected a small town with a large sugar mill with the assumption that it will have strong linkages with the surrounding cane growing villages, which will contribute to rural development and prosperity.  

As of 1971, Dhampur was a town of about 23,000 inhabitants living in about 2 square kilometers’ area. Based on then available literature on small towns, I had expected Dhampur to be a mofussil town that would not be much different from a large village. To my surprise, Dhampur was a compact little market town with well-defined streets for different kinds of businesses, with many buildings having shops on the ground floor and living spaces upstairs, and some solely residential gallis (lanes) that had mostly two-story houses stuck next to each other.  Also, it was a very much a walkable town, with cycle rickshaws being the only mode of public transport. The town was surrounded by green agricultural fields. The Dhampur Sugar Mill was located about 5 Kilometers South-east from the town in the midst of these fields it involved taking a long rickshaw ride to get there.

Earlier this year on 18 February 2024, I returned to Dhampur to see how this small town has changed over four decades. I found that Dhampur has grown to be a settlement of about one lakh population, with residential and commercial development along all the five highways emanating from the town. There are large showrooms for cars and motor cycles, schools and colleges, hospitals and clinics, marriage banquet halls, shops and restaurants, and even a fancy stone façade four story Eurasia Palace Hotel. Several new residential colonies with apartment blocks and bungalows are being developed in the surrounding agricultural areas. Now there is a clear distinction between the compact core or old town and newly developed urban periphery, which is not yet legally recognized to be a part of the town. E-rikshaws popularly called `metro service’ have replaced cycle rickshaws. There are also a few three-wheeler auto-rickshaws as well as shared tempos running on fixed point to point routes.

To know more on how this small agro-industrial town is becoming a vibrant city, follow the study updates on: https://cprindia.org/project/four-decades-of-development-in-dhampur