Government has set a total expenditure target of Rs 64.64 billion for telecom public sector units, including Bharat Sanchar Nigam Limited (BSNL), Mahanagar Telephone Nigam Limited (MTNL), ITI Limited, Centre for Development of Telematics (C-DoT) and Telecom Consultants of India Limited (TCIL), during 2014-15.

The government has earmarked internal and extra budgetary resources (IEBR) for BSNL at Rs 51.32 billion, for MTNL at Rs 80.85 billion, for ITI at Rs 4.61 billion, for C-DoT at Rs 600 million. Further, it has earmarked Rs 10 million each for Hemisphere Properties India Limited (HPIL) and TCIL.

In addition to IEBR, BSNL will also get Rs 1 billion as refund of upfront charges paid for surrendering the broadband wireless access (BWA) spectrum.

The government has also earmarked Rs 27.60 billion for laying out optical fibre based network for defence services. The project is being managed by BSNL. The target date for completion of network for defence is June 2015. Recently, BSNL had issued advance purchase order of around Rs 86.78 billion for 10 year contract to five companies for supplying and deploying optical fibres for the communication network of defence forces.

Further, the government has transferred Rs 35.37 billion to Universal Service Obligation Fund (USOF) which is primarily used for increasing telecom service penetration in rural areas. The National Optical Fibre Network, which aims to connect 250,000 village panchayats with high speed broadband services, is being funded through USOF. The government has set target to connect 50,000 gram panchayats by broadband this fiscal and all village panchayats by end-March 2017.

The allocation to HPIL is aimed at resolving the surplus land issue of VSNL, now Tata Communications. HPIL is a special purpose vehicle, established in 2005 by the Cabinet to execute the transaction related to the surplus VSNL land. Tata Communications had acquired VSNL in 2002, but the deal did not include 773.13 acres of land assets owned by VSNL, which have been lying unused following the acquisition. Government will also provide Rs 200 million loan to HPIL for hiring a consultant that will work on procedures for hiving off the land.