By Dr. Jaijit Bhattacharya
The third phase of BharatNet is expected to cost upwards of USD 30 billion to roll out. BharatNet is an ambitious project of the Government of India, to set up a national connectivity backbone that will connect the last person standing, and therefore help in achieving digital antyodaya. This network will largely be set up using fibre optics, a technology that is fairly future-proof and has the ability to carry hundreds of gigabytes of data.
As we have all seen during the Covid pandemic, it is critical to have connectivity with each and every person in this country, in order to provide the basics of life, including healthcare, education and even livelihood. Those who form the vulnerable sections of the population and who could not get access to digital connectivity ended up losing two years of education or even access to healthcare and, therefore, losing the right to life itself. Clearly, such situations are unacceptable in the civilised world and hence there is a need to rapidly build a national connectivity backbone that will help connect all.
Therefore, the government is rightly pulling out all stops to roll out this infrastructure that is so crucial for being able to live in the modern connected world. And hence the savings in the USO (Universal Service Obligation) fund are being used to fund this infrastructure. The USO fund was created through a cess from telecom companies who were setting up connectivity in urban areas so that the fund could be used to roll out rural connectivity. This was an outcome of the privatisation of the telecommunications sector, wherein once the public sector receded, it was deemed necessary that the activities of the private sector should help subsidize and fund the rollout of connectivity in the rural areas.
The first and foremost is an immediate loss to the economy. It would put a strain on the CAD (Current Account Deficit). CAD is the difference between the total value of exports and the total value of imports. If the CAD is very high, it would lead us to the economic situation that India was in 1991 or the situation that is being faced by Sri Lanka and Pakistan now. It would also make the rupee weaker and thus reduce our ability to import other critical goods such as petroleum, which will become more expensive in rupee terms.
But more importantly, when we import goods, we export the growth to the countries from where we import the goods. Say we import the optical fibre from China, then it would be the Chinese workers who would be getting the jobs, and these Chinese workers will use that money to buy clothes and furniture, thus providing more jobs to those who manufacture clothes and furniture in China, who in turn will again spend that money, and create a virtuous cycle in China. So the growth will happen in China, while the money is spent by the Indian exchequer. In other words, China will benefit from the multiplier effect of the network being rolled out in India, using Indian exchequer’s money. Clearly, this cannot be acceptable to the Indian taxpayers or any policymaker.
Thus, it would make imminent sense to ensure that we procure as much of the network from Indian manufacturers, as possible, or in other words, have a clear policy of Atmanirbhar Bharatnet. If we look at road networks that are largely made of indigenously manufactured products such as cement and steel and with Indian labour, the multiplier effect of such projects in the year of spend is 2.5. This implies that the BharatNet network, which will cost over USD 30 billion, would add 2.5 times USD 30 billion, which is USD 75 billion to the Indian GDP.
In reality, such a project cannot be executed in one year. BharatNet is targeted to be completed by 2025. Nevertheless, it does not take away the fact that if it is executed by procuring as much as possible domestically, it would have a very significant impact on the growth of the economy. Not doing so would be a lost opportunity.
However, India is a signatory to the WTO (World Trade Organization agreement) that dictates its signatories to have a non-discriminatory procurement of goods, wherein non-tariff trade barriers cannot be set up to discourage imports from other countries. So can the Indian government legally give preference to domestic players in comparison to foreign players? Fortunately, the Government of India is free of any WTO obligations for the government’s own procurement. Since BharatNet is a government procurement project, the government is free to procure from players who manufacture in India, without contravening any provisions of the WTO.
Would such a domestic manufacturing preference for Indian manufacturers compromise the quality of BharatNet? The answer is a resounding NO. On the contrary, Indian fibre optic manufacturers are noted globally for their superior products. India is one of the few countries that have significant installed capacities for Bend-Insensitive fibre, which is able to tolerate bends in the fibre, which happens rampantly during fibre rollout in India. Such fibres fall under a standard known as ITU-T G.657.A2 fibre, or simply A2 fibre.
It would also encourage the manufacturers of electronics related to fibre optic rollout, to scale up production in India and therefore achieve world-class production capacities that would help them capture the global market. Such a strategy has been a common practice in developed economies and should be adopted for Indian government procurement.
And finally, atmanirbhar BharatNet will also be a secure network, as mentioned in one of my previous articles in this column. Compromising our communications backbone can bring our country down to its knees. Thus, an atmanirbhar BharatNet should be a non-negotiable policy. An Atmanirbhar BharatNet is essential for an Atmanirbhar Bharat.
This article first appeared in India Today, https://www.indiatoday.in/opinion-columns/story/gdp-growth-bharatnet-atmanirbhar-bharat-1967703-2022-06-28