Telecom Fees Mount for Indian Firms,₹2 Lakh Crore and Counting

• The government's budget deficit hit 115% of the full-year target with four more months to go

• Supreme Court had said that the govt can take into account a firm’s entire revenue for calculating licensing fees

Indian government is seeking at least $30 billion in overdue telecom fees from mobile-phone service providers to energy companies and fertilizer makers as it struggles to meet its budget deficit target with economic growth foundering.

Gujarat Narmada Valley Fertilizers & Chemicals Ltd. on Wednesday said the telecom ministry has ordered it to pay₹15,020 crore ($2.1 billion) by January 23, more than 20 times the company’s annual profit. This follows a $3 billion demand from Vodafone Group Plc’s Indian unit, another $3 billion from Bharti Airtel Ltd., and reports that GAIL India Ltd. has been asked for $24 billion.

Prime Minister Narendra Modi must arrest a deterioration in public finances if he’s to boost spending and stimulate an economy that’s slumped to a six-year-low. India’s budget deficit hit 115% of the full-year target with four more months to go. A Supreme Court verdict is helping the government in its hunt for funds – at least from companies that bought any form of telecom licenses.

Punishing dues: Fee demands exceed the companies' annual profits

“The emphasis on non-tax revenue is not surprising given weak tax collections," said Priyanka Kishore, head of India and south-east Asia economics at Oxford Economics in Singapore. “If current trends persist it is likely that the Modi government’s fiscal deficit target will slip to 3.7% of GDP" in the year ended March 2020 compared with the 3.3% target.

Gujarat Narmada said it will seek legal advice in the matter, which pertains to licenses for satellite phones and internet services held between 2005 to 2019.

GAIL India is also facing a ₹1.7 trillion demand, Press Trust of India reported Dec. 22 without saying from where it got the information. GAIL has told the government it owes nothing more than what it has already paid, according to the report. Vodafone’s local unit in December said it will cease operations if it doesn’t get government support.

Modi’s administration has been asking companies with telecom licenses to pay dues after the nation’s Supreme Court said it can take into account a firm’s entire revenue for calculating licensing fees.

Gujarat Narmada is a joint venture by the government of the western Indian state of Gujarat and the Gujarat State Fertilizers & Chemicals Ltd., according to its website.

(Except for the headline, this story has not been edited by Scrabbl staff and is published from a syndicated feed.)