Sunday, November 13 2005 14:47 Hrs (IST) - World Time -

New Delhi: In a piquant situation, the Finance Ministry has raised objections over the manner of decision making by the Telecom Ministry on the issue of cut in license fee and revenue share announced by the latter for the national long distance service operators.

Finance Ministry is understood to have raised procedural objection to the license fee cut by Communications Ministry as it had non-tax revenue implications

MoF per se is not objecting to the license fee cut in this regard but felt it should have been consulted before. If various ministries resort to such steps, there could be huge loss of revenue to the Government, finance ministry officials told sources.

Royalties and license fee of various ministries account for Rs 25,000 crore annually out of the total non-tax revenue of Rs 77,000 crore and, therefore, revenue implications should be studied before taking such decisions, officials said.

Department of telecom officials put the loss to the exchequer due to the license fee cut at Rs 400 crore. DoT last week announced cut in entry fee in the national and international long distance segment to Rs 2.5 crore from Rs 100 crore and Rs 25 crore respectively.

Sources in the Communication Ministry indicated that the Financial Advisor had not endorsed the move to slash the revenue share for the operators.

The revenue share was also reduced from 15 to 6 per cent. These changes are to take effect from January next year.

Officials of DoT had said the shortfall in revenues would be made good by the future increase in traffic, which will also result in increased revenues.

Telecom Minister Dayanidhi Maran had said long distance telephone tariffs could drop by over 9 per cent, following the reduction in entry fee for NLD and ILD players to a uniform Rs 2.5 crore from the existing Rs 100 crore and Rs 25 crore respectively, even as it cut the revenue share to 6 per cent.

"We have removed all the barriers. There will be a lot more competition in both segments and major beneficiary will only be the consumer," he had said, adding that this was in line with the proposed `IndiaOne' regime.