February 28, 2020
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Hear The False Ring?

Why free mobiles to BPL folks is a bad idea

Hear The False Ring?
Hear The False Ring?

“Here you don’t have money to provide them food, and you are thinking of giving them phones,” scoffs a minister in the UPA government, obviously off the record. His comment mirrors the general negative reaction to the ‘Har Haath Mein Phone’ scheme mooted by the Planning Commission, which aims to provide a free mobile phone to each below the poverty line (BPL) family. The PMO is trying to play it down, saying it’s still under consideration, but sources say it may resurface later in a modified way. Here are 10 reasons why the scheme, at least in its present form, is a non-starter:

  1. BPL families struggle for basic needs like food and shelter, not a mobile phone. Says Harsh Mander, social activist and former NAC member, “Phones should not be an area of public expenditure. Food, education, health and social security should be prioritised.”
  2. Of course, just what qualifies a family for BPL status itself remains a subject of raging debate. According to Mander, 60 per cent of India’s poor are not registered as BPL. So, the phones may not reach the targeted group at all, a problem compounded by the lack of a clear delivery mechanism. According to a World Bank study, less than 50 per cent of the subsidies targeted for BPL families actually reach them.
  3. Many BPL families are likely to sell their phones for a fast buck.
  4. In most areas where BPL families live, there is an acute shortage of electricity. Thus, they may not be able to charge their phones. In some villages, shops and common service centres offer phone charging for a payment. Will they be willing to pay?
  5. The scheme would have to be implemented (at least initially) by the state-run BSNL and MTNL, which will source the handsets (at about Rs 1,000 a pop, these will have to be made in China).
  6. Private sector operators are not interested in an extremely low-return business. A company spends about Rs 100 to acquire and maintain a subscriber. The average monthly recharge in rural areas is already abysmally low at around Rs 15-20 a month. At that rate, the companies will take at least six months to recover just their acquisition cost. The situation with BPL families is expected to be similar. The entire load of this low-revenue customer base may fall on the loss-making BSNL and MTNL.
  7. The government has access to Rs 25,000-30,000 crore under the Universal Service Obligation (USO) fund, financed by service providers to increase rural penetration. It may dig into this to fund the Rs 7,000-crore plan. But this has to be cleared by the Union finance ministry, which has serious reservations about the scheme on the fiscal rectitude front. Also, the USO fund is primarily for rural rollout. Feeding BPL families with a phone is a different proposition—this will be opposed by a combative mobile industry, already at loggerheads with the government on how to use the USO fund.
  8. Some sections of poor families—say, casual- and semi-skilled workers like carpenters, mechanics and electricians—may benefit from a mobile phone. Most of these people, however, have already found the resources for a phone.
  9. Of course, with the coming of mobile banking and microfinance, there could be some benefits (and empowerment) for the people—especially for those who don’t have access to banking. But these are early days yet on that front, even for urban areas.
  10. The scheme will lead to a turf war within the government. Phones and telecom penetration come under the ministry of communications; subsidies under the finance ministry; and a majority of social schemes for BPL families like NREGA and so on fall under the purview of the rural development ministry. This scheme will messily straddle all three territories.

With so many mixed signals attending this beneficence, there is likely to be more cacophony, not a free cellphone at the end of the line.

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