What BharatNet can learn from the rural-roads scheme: involve states, local bodies, private sector

This article first appeared in ET Prime on 13 Feb 2020.

With the Internet increasingly becoming the driver of economic growth and considering its poor penetration in rural India, the government came up with the National Optical Fibre Network (NOFN) project in 2012.

It was an ambitious programme to provide high-speed connectivity to 2,50,000 gram panchayats (GP) by 2015. NOFN was designed to incrementally provide the fibre from the sub-district to the GP, as it was presumed that the state-owned Bharat Sanchar Nigam Limited (BSNL) already had fibre connectivity up to the sub-district level.  

A special purpose vehicle (SPV) called Bharat Broadband Networks Limited (BBNL), a wholly owned government of India enterprise under the department of telecom (DoT), was set up for implementing NOFN. It was envisaged that it would lease existing bandwidth from BSNL, PGCIL, and Railtel — each allocated a specific state, with BSNL having more than 80% share. After the provision of end-to-end connectivity, BBNL would provide non-discriminatory access to all Internet service providers (ISPs), telecom and cable service providers, and other retailers, and enable the extension of mobile broadband. To facilitate the ROW (right of way) rules, BBNL had tripartite agreements with the state governments and the executing agency for that state.   

A tale of missed targets 

Despite recognising the role of broadband network that would “transform governance, service delivery, and unleash local innovation capacity through rural broadband”, NOFN missed its targets by wide margins and was extended several times. Its architecture was changed to provide redundancy and a more-ambitious project called BharatNet was envisaged with a cost of INR42,068 crore.  

 In the BharatNet model, states could also lead and implement the initiative. By December 31, 2019, BharatNet had missed both phase I and phase II targets by a huge margin. Only 50% of the GPs were service-ready. Further, the utilisation of the infrastructure was very poor, with only 15,000 GPs having Wi-Fi connectivity.  

Several reasons, including the following, have been cited for this failure.  

BharatNet was designed as a top-down scheme of the DoT with little involvement of the states, implementing agencies, or vendors. The proposed network architecture that relied on BSNL’s existing fibre was an issue. In several places, the fibre was not available or not in good condition. The decision to implement NOFN/BharatNet only by state-run enterprises (BSNL, PGCIL, and Railtel) caused several delays due to the inefficient management process —a characteristic of the PSUs. The initial focus was only on providing connectivity the GPs without considering the last-mile connectivity options for the end-user. There was little involvement of the states. Often the agency or the GP, where the connectivity terminated, was not aware of the applications for which they could use the connectivity. No separate project-monitoring organisation was put in place.   

BBNL’s functioning was constrained by the fact that it operated within the framework of DoT. It had little operational autonomy and processes for adopting a different approach. The scope for BBNL was further reduced as some of the states, such as Andhra Pradesh, Kerala, and Gujarat, opted to take on this role themselves, citing the slow progress of BharatNet.

Lessons from PMGSY

When we compare the poor outcomes of BharatNet with the Pradhan Mantri Gram Sadak Yojana (PMGSY), one of the transformational development schemes and a key achievement for the government, the question one should ask is: are there some lessons that can be learnt from PMGSY? Though delayed from its earlier target date, PMGSY is set to achieve its deadline. The scheme was initiated by the rural development ministry (MORD) in the year 2000. With an outlay of USD35 billion, it had an objective of connecting all eligible rural habitations having a population of more than 1,000 in three years and all unconnected habitations with a population of more than 500 (in hill states, deserts, tribal areas, and backward districts) by 2007.

PMGSY started as a 100% centrally sponsored scheme financed through cess on high-speed diesel of INR0.75/litre. From 2015, the contribution pattern for financing changed to 60:40 for the centre and state, respectively, and 90:10 for the hilly and backward states. By 2019, it had covered more than 97% of the eligible habitats. Based on the success of the roll-out, the programme was expanded to cover all habitations with a population of more than 500. Given the rapid progress, the completion date was advanced to March 2020 instead of the original date of 2022. As was to be expected, PMGSY has transformed the socio-economic scenario in rural India.  

The ownership for deployment of rural roads lies with the National Rural Roads Development Agency (NRRDA), which was later renamed as National Rural Infrastructure Development Agency (NRIDA). The agency reports to the rural development ministry. Its objective is to provide management and technical expertise to various states for implementing PMGSY. For technical aspects of road design, NRIDA works with state PWD and other agencies.  

Rural roads are selected and prioritised in a bottom-up manner across villages, blocks, district, and the state. Objective methods to prioritise road selection, standardised processes for engineering, design and contract execution, coupled with independent quality monitoring and in-built maintenance in civil contracts were critical to project outcomes. More than achieving the physical targets, PMGSY has brought about a fundamental shift in the way rural roads are mapped, designed, monitored, and built. This led to several states to adopt the PMGSY model in their state-level rural programme. With time, the focus has shifted to low carbon and green designs, using climate-resilient techniques.

Given the possible transformational potential of a broadband connectivity to GPs, some learnings from PMGSY that DoT can consider are:

• User involvement in design: Since rural telecom connectivity enhances socio-economic development, user agencies and the rural administrations are in a position to identify their demand and requirements. Given that new technologies have the potential to create new applications which a layperson may not be able to identify, there is also a need to meld this with an appropriate top-down design that leverages the technology potential. This model has worked well for PMGSY. While the village-level committees prioritise road development, Central Road Research Institute and other research organisations specify the design parameters, taking into account the local context.
• Multi-functional/cross-organisational committees for design and implementation: A large project such as NOFN/BharatNet necessarily requires involvement of a number of agencies — state governments, and district, tehsil, and village administrations. While designing a telecom network requires professionals with telecom background, the success of such a project necessarily depends also on the management and collaboration processes at all levels of administrative hierarchy. However, DoT did not involve any state-level agency in the design of the network. The NOFN/Bharatnet is being implemented by BSNL/PGCIL/Railtel with their state-level units. On the other hand, PMGSY’s organisational structure involves the newly created separate agency — NRRDA/NRIDA and the SRRDA, PWD, rural-road development agencies, gram panchayats, private operators, etc. These agencies are involved in rural-road planning, sectoral coordination, funds, contracts, and maintenance management. While the state-level units of BSNL may be also doing similar activities, the fact that the design, implementing, and monitoring agency is bundled into one in the case of BharatNet, leading to a lack of transparency and diffused accountability for targets.
• Private sector participation: BharatNet is being implemented only by PSUs that were given the responsibility on a nomination basis. The costs for a PSU are higher due to the inefficiency in management. For PMGSY, road works are awarded on a bidding basis, thus leveraging the efficiencies of the private sector. A concern that could arise in involving the private sector may be the loss of quality. The specification of standards, a five-year maintenance contract as a part of the construction project, and independent monitoring mitigate this aspect.
• Ring-fencing USOF: While telecom operators pay 5% of their adjusted gross revenue towards Universal Service Obligation Fund (USOF), the amount is transferred to the Consolidated Fund of India. Allocations are then made on a demand and review basis. So, despite the unspent balance of nearly INR50,000 crore in USOF, there has been delay in its implementation. On the other hand, the rural-road fund is ring-fenced and is funded through cess on high-speed diesel and petrol. Ring-fencing enables smoother flow of funds
• Partnering with PMGSY: : The NOFN/BharatNet should have partnered with PMGSY. Laying the ducts and fiber while the PMGSY roads were being constructed would have increased the PMGSY cost by a small amount. This incremental cost would then have been much smaller than the cost of laying fibre afresh. This would have also streamlined the ROW permissions etc. — something that has often delayed NOFN/BharatNet implementation. The nation, then, could have a more widely dispersed fiber network at a much lower cost.