Digital Bharat Nidhi: A Renewed Effort for Bridging the Digital Divide

The author is a technology lawyer based in New Delhi. The views expressed here are his own.

As India stood on the brink of a telecom revolution in the 1990s, the National Telecom Policy of 1999 envisioned affordable telecommunications services for everyone. It led to the creation of the Universal Service Obligation Fund to bridge the digital divide and ensure that telecom services were accessible and affordable in rural and remote regions.

Over the last two decades, the Universal Service Obligation Fund supported several flagship projects, such as the Bharat Net program to provide broadband connectivity in all villages and the Public Wi-Fi Hotspot initiative to democratize access to telecom and internet services. Despite ambitious goals and considerable progress, the fund has struggled with underutilization and inefficient management. Currently, around INR 80,000 crore collected under the fund is still unutilized.

Recently, the Central Government published the 2024 Digital Bharat Nidhi rules under the 2023 Telecommunications Act, introducing a revised regulatory framework to manage the Universal Service Obligation Fund. Prior to this, the 1951 Indian Telegraph Rules, under the Indian Telegraph Act 1885, provided the foundational regulatory structure for managing the fund. Notably, the revised framework has renamed the Universal Service Obligation Fund to Digital Bharat Nidhi.

Assessing the Management of the Fund

Governments often impose levies and charges to raise funds for specific purposes. In India, telecom service providers contribute 5% of their annual revenue to the Universal Service Obligation Fund. These contributions are first credited to the Consolidated Fund of India. Following the budgetary process and parliamentary approval, the central government allocates these funds to projects that meet the objectives of the fund. The fund is managed by an Administrator appointed by the Central Government, who selects the implementing agencies for these projects.

Reports of the Comptroller and Auditor General of India (CAG) on Union Government Accounts, including the latest in 2023, show variations between the levies collected from Telecom Service Providers and the amounts transferred to the fund. This shortfall explains why a sizable part of the fund, around INR 80,000 crore, is still unused. The CAG also notes that the balance in the Consolidated Fund of India was used for purposes other than enhancing telecom services in underserved areas, undermining the very objective of the fund.

Moreover, the previous regulatory framework caused many bottlenecks, hindering effective implementation. The Administrator of the fund had limited independence and autonomy. For instance, the fund could only be disbursed to projects listed explicitly under the Telegraph Rules. Additionally, the Administrator had little flexibility in choosing implementing entities, often allocating projects to Telecom Service Providers who showed minimal interest in underserved regions. This restricted autonomy and rigid regulatory environment hindered the efficient use of funds.

A Revised Framework to Bridge the Digital Divide

The revised regulatory framework largely retains the previous operational model but made significant changes to manage the Universal Service Obligation Fund, now called 'Digital Bharat Nidhi.’ The Administrator will enjoy greater independence and autonomy, which could improve the efficiency and governance of the fund. The scope of the fund has been expanded to cover underserved urban areas alongside rural and remote regions. Notably, the Administrator will be able to determine criteria and select projects for funding that align with objectives enshrined under the Telecom Act. Moreover, the revised framework goes beyond the traditional concept of the Universal Service Obligation Fund by offering flexibility to support startups and promote sustainable and green technologies in telecommunications.

One key change is removing a restriction that previously allowed only licensed telecom service providers to implement projects. The Administrator can now select entities based on their demonstrated efficiency and ability. The new framework allows for calls for applications, in addition to the existing bidding and nomination procedures, for projects related to research and development in telecom. This change is intended to expedite the selection process.

The revised framework also explicitly addresses the digital divide in India. It mandates funding for schemes and projects targeting underserved groups such as women, persons with disabilities, and economically and socially disadvantaged sections of society. Funding targeted to the marginalized and underserved communities would help to bridge the significant gaps and gender disparities in access to technology and the internet.

Finally, the revised regulatory framework has made significant changes to the operational structure of the fund. However, it does not provide any conclusive resolution to the larger issue related to the seamless transfer of levies collected from Telecom Service Providers to the designated fund. It could potentially lead to further accumulation of unutilized funds. Addressing these issues is critical to realizing the fund's objective and its effective management for bridging the digital divide and ensuring universal access to telecommunications services for all.