Centre plans to merge telecom, IT ministries

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.