Decoding the Budget 2026 Telecom Receipts: Real Revenue vs. Accounting Entries
The Union Budget 2026-27 has presented a striking figure: the government's revised estimate for telecom receipts has surged by 71% to ₹1.4 trillion for the fiscal year 2025-26. While this appears to signal robust revenue generation from the telecommunications sector, a closer examination reveals that the headline number masks a complex reality involving substantial non-cash transactions with the state-owned Bharat Sanchar Nigam Limited (BSNL).
Understanding Telecom Receipts and Their Composition
Telecom receipts constitute a vital component of the government's non-tax revenue, primarily derived from private telecom operators through statutory dues. These operators pay 8% of their adjusted gross revenue (AGR) to the government, with 3% allocated as licence fees and 5% directed to the Digital Bharat Nidhi (DBN) to bridge the digital divide. These funds support regulatory functions and digital infrastructure expansion across India.
In the Budget 2026-27, telecom receipts are projected to account for 21.1% of the total non-tax revenue estimate of ₹6.67 trillion for 2025-26. This marks a significant increase from the actual receipts of ₹84,794 crore in 2024-25 and the earlier projection of ₹82,443 crore for 2025-26. Historically, receipt projections have seen increases ranging from 2.5% to 33%, making the current 71% rise particularly notable.
The BSNL Factor: How Non-Cash Transactions Inflate Receipts
A substantial portion of the reported telecom receipts stems from transactions with BSNL, which differ fundamentally from cash inflows from private operators. Unlike private entities, BSNL does not purchase spectrum in auctions; instead, the government provides it with capital expenditure, spectrum, and support for statutory dues. The process involves:
- The government initially disburses funds to BSNL, recorded as expenditure in its books.
- BSNL then repays this amount by issuing equity shares in the name of the President of India.
- These transactions are classified as receipts, despite involving no actual cash exchange.
Government officials justify this accounting treatment by emphasizing that spectrum is a scarce national resource with assessed market value. By recording these entries as receipts, the government ensures that the support extended to BSNL is not perceived as being given away for free. This approach is sanctioned through revival packages, such as the June 2023 Union Cabinet approval for reserving and allotting spectrum worth ₹89,047.8 crore to BSNL for 4G/5G services via equity infusion from 2023-24 to 2025-26.
Mechanism of Equity Share Issuance by BSNL
As a fully state-owned entity, BSNL can issue shares to the government by increasing its authorized share capital. This mechanism allows the government to inject funds into the company without direct cash outflows. For instance, in June 2023, the Union Cabinet approved raising BSNL's authorized capital from ₹1.5 trillion to ₹2.1 trillion, facilitating further government investment. Authorized capital represents the maximum share capital a company can issue, as stipulated in its corporate documents.
Assessing Actual Cash Inflows from Telecom Receipts
According to estimates by telecom analyst Parag Kar, approximately ₹63,000 crore of the telecom receipts for 2025-26 are attributed to BSNL in lieu of spectrum, AGR payments, and capital expenditure support. This non-cash component has significantly contributed to the inflated receipt figures. Consequently, only around 55% of the government's telecom receipts are expected to represent actual cash inflows from private operators.
The government had previously accounted for expenditures related to BSNL support in earlier years but did not book them under receipts. This shift in accounting practices has led to a distorted perception of revenue generation, highlighting the need for transparency in distinguishing between real income and accounting entries.
Implications and Broader Context
The inclusion of non-cash transactions in telecom receipts raises questions about the accuracy of revenue projections and their implications for fiscal planning. While these accounting entries reflect the economic value of resources allocated to BSNL, they do not contribute to the government's liquid assets. This distinction is crucial for stakeholders, including investors and policymakers, who rely on budget figures to assess economic health.
Since 2019, the government has extended three revival packages to BSNL and MTNL, totaling ₹3.2 trillion. These measures aim to bolster the state-owned telecom entities, but their accounting treatment underscores the complexities in evaluating public sector financials. As India continues to expand its digital infrastructure, understanding the nuances of telecom receipts becomes essential for informed decision-making and sustainable growth in the sector.
