India’s auditor flags major revenue losses in telecom and IT ministries

New Delhi: The Comptroller and Auditor General (CAG) has flagged serious lapses in the functioning of the ministry of communications and the ministry of electronics and information technology (Meity), raising concerns over revenue losses, weak oversight, and inefficient policy implementation in key projects.

The audit report, tabled in Parliament on Tuesday, highlighted irregularities in telecom revenue-sharing and incentives for electronics manufacturing, which could have implications for the government’s ‘Make in India’ initiative and its push to improve the country’s digital infrastructure.

The audit presented a picture of weak oversight and financial inefficiencies across digital infrastructure and telecom governance. With the government aggressively pushing for self-reliance in telecom, semiconductors, and digital services, the findings raise questions about execution and accountability in key schemes.

Telecom: Wrong numbers

The biggest red flag in the CAG report was the telecom sector. The apex auditor said the department of telecommunications had failed to recover ₹2,463.67 crore from telecom service providers due to delays in revenue assessments.

The audit body found that revenue assessments, which should have been completed within 12 months, took an average of 20 months, leading to under-recovery. It also questioned the effectiveness of the SARAS revenue management system, introduced to streamline telecom revenue collection.

India’s telecom sector, which contributes nearly ₹14,000 crore annually to the government through revenue sharing, has been under scrutiny for under-reporting and compliance gaps.

The CAG also flagged major financial lapses at BSNL, exposing how the state-run telecom operator had lost ₹1,757.76 crore by failing to bill Reliance Jio for additional technology usage under an infrastructure-sharing deal.

BSNL also suffered losses of ₹38.36 crore by not deducting licence fees from payments to telecom infrastructure providers and ₹5.43 crore due to its failure to claim GST input tax credits.

Electronics manufacturing: Faulty disbursals

The national auditor found delays in the processing of applications and disbursing of incentives under the modified special incentives package scheme (M-SIPS) that was introduced to boost electronics manufacturing.

Despite ₹36,991 crore in committed investments under the scheme, only ₹2,136 crore had been disbursed by April 2023. Also, frequent policy changes led to inconsistencies, affecting investor confidence, the CAG said in its report for the year ended 31 March 2023.

National Knowledge Network: Poor bandwidth

The audit body pointed to financial inefficiencies in the National Knowledge Network, a project meant to connect universities, research institutions, and hospitals with high-speed internet. The ₹6,548-crore project, which has seen multiple extensions, met its connectivity goals but lacked a long-term financial roadmap, as per the findings of the apex auditor.

CAG’s report flagged poor bandwidth utilisation for NKN, weak monitoring of hired network links, and gaps in enforcing cybersecurity policies, raising concerns about its sustainability once government funding stops.

CAG suggested that the ministry develop a dedicated web platform for network management, ensure compliance with memorandums of understanding and intellectual property policies, establish a framework for periodic security audits, and incorporate last-mile mapping and objective bandwidth estimation criteria in project planning.

The National Knowledge Network was approved in March 2010 by the Cabinet Committee on Infrastructure for a 10-year period with an outlay of ₹5,990 crore to link 1,500 institutions. The project has since received four extensions, the latest to 31 March 2024, with a revised budget of ₹6,548.20 crore, as per the CAG report.

Postal services: Tax losses

CAG pulled up the department of posts for non-compliance with established guidelines, leading to a ₹17.22 crore loss to the government, pointing to weak enforcement of rules in one of the country’s largest government agencies.

This included ₹13.57 crore in unrecovered GST on Speed Post services under the book now pay later scheme across 15 postal circles between July 2022 and September 2023.

The balance loss of ₹3.65 crore was on account of the Kerala Postal Circle’s failure to deduct tax at source on maturity proceeds of Postal Life Insurance and Rural Postal Life Insurance policies from September 2019 to May 2023.

The audit body also flagged irregular promotions in the department, where 43 officials were allowed to advance without completing their probation periods.