While the government, according to media reports, is considering a proposal to waive the penalty and interest components of Adjusted Gross Revenue (AGR) dues that were levied on telecom players, following repeated rejections of relief by the Supreme Court, the question still remains – can government waive off the AGR dues? Per reports, the government is considering waiving 50 per cent interest and 100 per cent of penalties and interest on penalties on the AGR dues of telcos that make up a bulk of the AGR dues that were levied on telcos like Vodafone Idea and Bharti Airtel after the Supreme Court order of 2019. The possible move comes after the telecom operators had earlier sought interventions from the government. In September 2021, the Supreme Court had dismissed a curative petition filed by the telcos, which sought a recomputation of the AGR dues.
Per this media report that quotes sources, the waiver can provide potential relief of around Rs 1,000 billion to the telecom industry, of which around Rs 520 billion relief could come for VIL vs its total AGR dues of Rs 703 billion and Rs 380 billion for Bharti Airtel vs its total AGR due of around Rs 440 billion.
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Can the government waive off the AGR dues?
Even as the government intends to ensure a ‘3+1’ player market, the Telecom Act, 2023 doesn’t explicitly empower the government to waive off the telcos’ dues. In an analysis report, JM Financial said, “Unless it amends the Telecom Act or comes out with any other legislative or executive measures, we believe the government cannot waive off the AGR liability decided by the SC. Therefore, telcos have been pleading with the SC for AGR relief since the last 4 years despite the government agreeing that the SC’s AGR decision is detrimental to its objective of having three healthy private telcos” It further added that in such a situation, the government might mostly agree to extend the 4-year moratorium, which ends in September 2025, on payment of AGR/spectrum dues or convert dues into equity.
What is the government doing to aid telcos?
According to press reports, the proposal to waive off the dues is being discussed at the highest level including the finance ministry,
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