Centre plans to merge telecom, IT ministries

By : |September 28, 2001 0

By Shailendra Bhatnagar

NEW DELHI: The central government said on Thursday it planned to merge its
ministries of Information Technology (IT) and Telecommunications to harness the
huge potential of the domestic telecom sector. "We plan to merge the IT and
telecom ministries to create a single ministry within a week," Pramod
Mahajan, minister for Parliamentary Affairs, IT and Communications, said.

Mahajan, who took over the telecom portfolio as part of a government
reshuffle earlier in September, also forecast the downturn in the domestic
telecom industry due to a worldwide economic slowdown would not last more than
three months. "We will enter 2002 with larger opportunities. This gloom
will not last for more than 100 days," he told a telecommunications
conference without elaborating.

He said the merger of the ministries was in line with similar moves elsewhere
and would result in faster decision-making. India has the world’s eighth largest
telecommunications network. "There will be convergence at the policy
level," said Telecom Commission chairman Shyamal Ghosh who estimated the
ministries had 1,200 to 1,500 employees each on their rolls. "There will be
three departments (under the new ministry) – communications, post and
information technology," Ghosh said.

Right now India spends just 1.2 per cent of its gross domestic product
annually on the sector which has attracted some $5.0 billion in investments over
the past four years while Hong Kong spends 3.8 per cent of its GDP on the
telecom industry.

Better regulation

Telecom industry officials welcomed the merger but said the sector needed a
strong dose of regulation to reach its potential. The cabinet last month cleared
the introduction of a convergence bill to set up a new regulatory watchdog to
oversee the Internet, broadcasting and telecommunications sectors.

While the telecom sector was opened to competition in the mid-1990s, growth
has been hobbled by disputes between private players and the government on
revenue-sharing and licensing fees. "Foreign players are looking at seeing
how strong our regulatory policy is," said Rajan Bharti Mittal, joint
managing director at unlisted telecom firm Bharti Enterprises. "This is a
vital area if we are seeking investments."

India has more than doubled teledensity to 3.7 telephone fixed lines per 100
inhabitants in the past two years and plans to hike the number to seven by 2005
through investments of Rs 1.2 trillion ($25 billion). Earlier in the year, it
opened up the fixed-line sector to unlimited competition.

Mittal said while the global telecom industry was facing gloom, the Asian
markets were the only bright spots where cellular connections were doubling each
year. In India, the number of cellular subscribers soared nearly 85 per cent
year-on-year to 4.54 million at the end of August.

"With a proper regulatory regime we will have around 200 million
fixed-line and cellular subscribers by 2010," said Sanjay Mehta of Arthur
Andersen India.

(C) Reuters Limited 2001.

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