What is Adjusted gross revenue (AGR)?
(GS-II: Government policies and issues arising out of it)
Bharti Airtel has decided to opt for the four-year moratorium on adjusted gross revenue (AGR) and spectrum payments, making it the second telco after Vodafone Idea to accept the offer, which was part of the recently announced telecom relief package.
The Union Cabinet had in September approved several measures to extend lifeline to the cash-strapped telecom sector, including a four-year moratorium on payment of dues to the government arising out of the AGR judgment as well as payments of spectrum purchased in past auctions.
The government had asked the telecom companies to convey their decision on opting for the four-year dues moratorium by October 29, while also giving 90 days’ time to indicate if they wanted to opt for converting the interest amount pertaining to the moratorium period into equity.
What is AGR?
Adjusted Gross Revenue (AGR) is the usage and licensing fee that telecom operators are charged by the Department of Telecommunications (DoT). It is divided into spectrum usage charges and licensing fees, pegged between 3-5 percent and 8 percent respectively.
As per DoT, the charges are calculated based on all revenues earned by a telco – including non-telecom related sources such as deposit interests and asset sales.
What was the relief package?
Package includes a four-year moratorium on payment of statutory dues by telecom companies as well as allowing 100% FDI through the automatic route.
The wide set of measures proposed entail reforms for the ailing sector by way of granting moratorium on unpaid dues, redefining Adjusted Gross Revenue (AGR) prospectively and cutting in Spectrum Usage Charges.
How does the package help?
It provided much needed relaxation to telecom companies Vodafone Idea, Reliance Jio and Bharti Airtel.
These are expected to protect and generate employment opportunities, promote healthy competition, protect interests of consumers, infuse liquidity, encourage investment and reduce regulatory burden on Telecom Service Providers (TSPs).
A moratorium on AGR-related dues will offer space to the cash-strapped firm to improve its business and clear dues over a longer period.
The definition of AGR has been changed to exclude non-telecom revenue. All non-telecom revenue will be removed from AGR.
But how did the financial condition of the telcos deteriorate?
Let’s understand this in three simple steps:
It started by and large with the differing legal interpretation of AGR. To understand this, one must go back to 1999, when the government decided to shift from a fixed to a revenue-sharing model for the telecom sector. Telecom players would pay a certain percentage of their AGR, earned from telecom and non-telecom revenues, as licence and spectrum fee.
In 2003, the Department of Telecom (DoT) raised the demand for AGR payments. It said all revenue earned by telcos as dividend from subsidiaries, interest on short-term investments, money deducted as trader discounts, discount for calls and others, which was over and above the revenue from telecom services, would be included for calculation of AGR.
The telcos approached the Telecom Disputes Settlement Appellate Tribunal (TDSAT), which in July 2006 ruled the matter must be sent back to the regulator TRAI for fresh consultation. TDSAT rejected the government’s contention, and the Centre moved the Supreme Court. While the case was still ongoing, in 2012, the Supreme Court cancelled 122 telecom licences in the 2G scam case. This prompted a revamp, with spectrum now allocated through auctions.
What was the Supreme Court verdict?
In 2019, the Supreme Court gave the first verdict in the case, holding that DoT’s definition of AGR was the correct one, and that the telcos must pay the AGR, interest and penalty on non-payment.
Israel- Palestine issue
(GS-II: Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora)
Israel government has approved more than 1,300 new settlement housing units in the occupied West Bank (A territory the Palestinians seek as part of a future state).
The move appears to run contrary to the new government’s pledge to put ideological considerations aside and reduce tensions with the Palestinians.
Israel- Palestine conflict– Historical Background:
The conflict has been ongoing for more than 100 years between Jews and Arabs over a piece of land between Jordan River and the Mediterranean Sea.
It was between 1882 to 1948, when the Jews from around the world gathered in Palestine. This movement came to be known as
Then in 1917, Ottoman Empirefell after World War 1 and the UK got control over Palestine.
The land was inhabited by a Jewish minority and Arab majority.
The Balfour Declarationwas issued after Britain gained control with the aim of establishing a home for the Jews in Palestine. However during that period the Arabs were in majority in Palestine.
Jews favored the idea while the Palestinians rejected it. Almost 6 million Jews lost their lives in the Holocaustwhich also ignited further demand of a separate Jewish state.
Jews claimed Palestine to be their natural home while the Arabs too did not leave the land and claimed it.
The international community supported the Jews.
In 1947, the UN voted for Palestine to be split into separate Jewish and Arab states, with Jerusalem becoming an international city.
That plan was accepted by Jewish leaders but rejected by the Arab side and never implemented.
The creation of Israel and the ‘Catastrophe’:
It was in the year 1948 that Britain lifted its control over the area and Jews declared the creation of Israel. Although Palestinians objected, Jews did not back out which led to an armed conflict.
The neighboring Arabs also invaded and were thrashed by the Israeli troops. This made thousands of Palestinians flee their homes. This was called Al-Nakba, or the “Catastrophe”.
Israel had gained maximum control over the territory after this came to an end.
Jordanthen went on a war with Israel and seized control over a part of the land which was called the West Bank, and Egypt occupied Gaza.
Jerusalem was divided between Israel in the West and Jordan in the East.However, no formal peace agreement was signed, each side continued to blame each other for the tension and the region saw more wars.
Israeli forces captured East Jerusalem and the West Bank, various areas of Syrian Golan Heights, Gaza and the Egyptian Sinai Peninsula in the year 1967.
Israel still occupies the West Bank, and although it pulled out of Gaza the UN still regards that piece of land as part of occupied territory.
Israel claims the whole of Jerusalem as its capital, while the Palestinians claim East Jerusalem as the capital of a future Palestinian state.
Tensions escalated in recent month over Israel’s actions concerning Al-Asqa mosque in East Jerusalem.
Where is the West Bank?
It is a landlocked territory near the Mediterranean coast of Western Asia, bordered by Jordan to the east and by the Green Line separating it and Israel on the south, west and north. The West Bank also contains a significant section of the western Dead Sea shore.
What are the disputed settlements here? Who lives there?
The West Bank was captured by Jordan after the 1948 Arab-Israeli War.
Israel snatched it back during the Six Day War of 1967, and has occupied it ever since. During this war, the country defeated the combined forces of Egypt, Syria, and Jordan.
It has built some 130 formal settlements in the West Bank, and a similar number of smaller, informal settlements have mushroomed over the last 20-25 years.
Over 4 lakh Israeli settlers — many of them religious Zionists who claim a Biblical birthright over this land — now live here, along with some 26 lakh Palestinians.
The territory is still a point of contention due to a large number of Palestinians who live there and hope to see the land become a part of their future state.
When Israel took control of the land in 1967 it allowed Jewish people to move in, but Palestinians consider the West Bank illegally occupied Palestinian land.
Are these settlements illegal?
The United Nations General Assembly, the UN Security Council, and the International Court of Justice have said that the West Bank settlements are violative of the Fourth Geneva Convention.
Under the Fourth Geneva Convention (1949), an occupying power “shall not deport or transfer parts of its own civilian population into the territory it occupies”.
Under the Rome Statute that set up the International Criminal Court in 1998, such transfers constitute war crimes, as does the “extensive destruction and appropriation of property, not justified by military necessity and carried out unlawfully and wantonly”.
Mullaperiyar dam issue
(GS-II: Separation of powers between various organs dispute redressal mechanisms and institutions)
The Supreme Court has directed the Supervisory Committee to take an immediate and firm decision on the maximum water level that can be maintained at Mullaperiyar dam, amid torrential rain in Kerala.
The SC constituted a permanent Supervisory Committee in 2014 to oversee all the issues concerning Mullaperiyar dam. The dam is a source of friction between Tamil Nadu and Kerala.
What’s the issue?
Kerala said the water level should not go above 139 feet, the same as what the court had ordered on August 24, 2018, when the State was hit by floods. It is because the lives of 50 lakh people would be in danger if the water level in the dam is raised.
However, Tamil Nadu objected to this decision citing the Supreme Court judgments of 2006 and 2014, which fixed the maximum water level at 142 feet.
The court asked officials of Kerala and Tamil Nadu to interact responsibly and avert any danger to lives. The Court also made it clear that this was not an issue to play politics about.
Now, the supervisory committee will have to decide about the maximum water level and inform the court about it.
Mullaperiyar Dam– what you need to know?
Although the dam is located in Kerala, it is operated by Tamil Nadu following an 1886 lease indenture for 999 years (the Periyar Lake Lease Agreement) that was signed between the Maharaja of Travancore and the Secretary of State for India for the Periyar Irrigation works.
Constructed between 1887 and 1895, the dam redirected the river to flow towards the Bay of Bengal, instead of the Arabian Sea and provide water to the arid rain region of Madurai in Madras Presidency.
The dam is located on the confluence of the Mullayar and Periyar rivers inKerala’s Idukki district.
What does Tamil Nadu say?
Tamil Nadu claims that although it has undertaken measures to strengthen the dam, the Kerala government has blocked any attempt to raise the reservoir water level – resulting in losses for Madurai farmers.
Kerala, however, highlights fears of devastation by residents living downstream in the earthquake-prone district of Idukki.
Scientists have argued that if there is an earthquake in the region measuring above six on the Richter scale, the lives of over three million people will come under grave danger.