India steps up effort to claw back overdue telecom fees

Mumbai

INDIAN Prime Minister Narendra Modi's government is seeking at least US$30 billion in overdue telecom fees from mobile-phone service providers to energy companies and fertiliser makers as it struggles to meet its budget deficit target with economic growth weak.

Gujarat Narmada Valley Fertilizers & Chemicals Ltd on Wednesday said the telecoms ministry has ordered it to pay 150.2 billion rupees (S$2.8 billion) by Jan 23, more than 20 times the company's annual profit. This follows a US$3 billion demand from Vodafone Group Plc's Indian unit, another US$3 billion from Bharti Airtel Ltd, and reports that GAIL India Ltd has been asked for US$24 billion.

Mr Modi must arrest a deterioration in public finances if he's to boost spending and stimulate an economy that's slumped to a six-year low. India's budget deficit hit 115 per cent of the full-year target with four more months to go. A Supreme Court verdict is helping the government in its hunt for funds, at least from companies that bought any form of telecom licences.

"The emphasis on non-tax revenue is not surprising given weak tax collections," said Priyanka Kishore, head of India and South-east Asia economics at Oxford Economics in Singapore. "If current trends persist, it is likely that the Modi government's fiscal deficit target will slip to 3.7 per cent of GDP" in the year ended March 2020 compared with the 3.3 per cent target.

Gujarat Narmada said it will seek legal advice in the matter, which pertains to licences for satellite phones and Internet services held between 2005 and 2019.

GAIL India is also facing a 1.7 trillion rupee demand, Press Trust of India reported Dec 22 without saying from where it got the information. GAIL hasn't done business under its Internet service provider licence and there is no amount payable, a representative said by email on Thursday. Vodafone's local unit in December said it will cease operations if it doesn't get government support.

Mr Modi's administration has been asking companies with telecom licences to pay dues after the nation's Supreme Court said it can take into account a firm's entire revenue for calculating licensing fees. BLOOMBERG