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Report of the Comptroller and Auditor General of India

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Report of the Comptroller and Auditor General of India Report of the Comptroller and Auditor General of India for the year ended March 2013 Union Government (Communications and IT Sector) No. 20 of 2015 Report No. 20 of 2015 CONTENTS Description Paragraph Page Preface vii Overview ix Chapter I : Introduction About this Report 1.1 1 Authority for Audit 1.2 1 Planning and conduct of Audit 1.3 1 Profile of Audited Entities 1.4 2 Budget and Expenditure Controls 1.5 10 Chapter II : Department of Telecommunications Functioning of TERM Cells in Department of 2.1 11 Telecommunications Irregular Amendment of the Telecom Licences to permit 2.2 20 Intra-Service Area Roaming in June 2008 and its adverse financial impact on the Telecom revenues Hasty merger of Chennai Metro and Tamil Nadu Telecom 2.3 25 Circles Undue favour to CDMA licencees 2.4 29 Undue favour to operators using dual/multiple technology 2.5 33 Inordinate delay in issue of demand letters to eight telecom 2.6 34 licencees Short recovery of Pension contribution 2.7 37 Lack of due diligence in auction of spectrum for Broadband 2.8 39 Wireless Access (BWA) Services Chapter III : Department of Posts Performance Audit on Planning and Implementation of 3.1 53 ‘Project Arrow’ Scheme in Post Offices Banking and Money transfer operations in Department of 3.2 72 Posts Excess claim of remuneration amounting to ` 63.88 crore 3.3 85 Failure to raise claim against other departments 3.4 86 Non-availing of discount of ` 91.37 lakh for telephone 3.5 89 services and broadband internet connections Excess retention of cash balance 3.6 91 - iii - Report No. 20 of 2015 Description Paragraph Page Chapter IV : Department of Electronics and Information Technology Creation of Infrastructure for National e-Governance Plan 4.1 93 (NeGP) and Delivery of Services to common citizens through Common Service Centres (CSCs) Chapter V : Public Sector Undertakings under the Ministry Non/short billing of rental charges for leased circuits / STM 5.1 115 systems Inordinate delay in commissioning of OAN projects 5.2 117 Infructuous expenditure of ` 4.61 crore on Installation of 5.3 118 VPT sign boards in West Bengal Telecom Circle Non installation of DG sets procured resulting in blocking of 5.4 121 funds of ` 4.72 crore Non Recovery of Penalty from Defaulters 5.5 122 Erosion of subscriber base due to Porting Out by Subscribers 5.6 124 under Mobile Number Portability Non-deduction of Tax at Source resulted in liability of 5.7 128 ` 29.74 crore towards Income Tax Unfruitful expenditure due to non- functioning of IPLC-LIM 5.8 129 System Non auto-disconnection of services by the billing system due 5.9 133 to non-payment resulted in accumulation of dues from subscribers Imprudent Investment in GPON/GEPON Project 5.10 135 Follow up on Audit Reports – (Commercial) 5.11 141 Chapter VI : General Follow up on Audit Reports-(Civil) 6.1 143 Annexures I Statement showing calculation of cost recoverable on account of 147 GSM spectrum holdings above prescribed 2G spectrum by the TSPs II (a) Statement showing the additional spectrum usage charges on 149 merger of spectrum II (b) Statement showing the additional spectrum usage charges on 151 merger of spectrum III Statement showing the undue benefit extended to the CDMA 154 Operators IV Statement showing non-levy of SUC based on the total spectrum 157 allocated for using dual/multiple technology in respect of M/s Tata Teleservices - iv - Report No. 20 of 2015 Description Paragraph Page V Statement showing non-levy of SUC based on the total spectrum 159 allocated for using dual/multiple technology in respect of M/s Reliance Communications VI Statement showing the Reserve price payable as per Hon'ble 160 Supreme Court Order VII Statement showing the calculation of additional migration fee 161 factored upto March 2013 VIII Statement showing the Assurances given by DoP in the ATN 163 submitted during July-2008 for the C&AG Report No.1 of 2006 which are not fully realised IX Statement showing different kinds of frauds by misusing 164 software in various Postal Circles in DoP X Statement showing Irregular payment of interest on PPF 166 accounts XI Statement showing the details of remuneration claimed on MSY 170 Accounts XII Statement Showing details of claims not raised by the DAP, 171 Kolkata for pension payments to other departments XIII Statement showing details of non-availing of discount on 173 telephone/broadband services bills XIV Statement showing retention of excess cash balance in Post 174 Offices XV Statement showing delay in Implementation of SWAN 176 XVI Statement showing detail of ACA release to States without 177 sanction of EC and pending UC XVII Statement showing details of OAN Projects not commissioned as 179 of March 2013 XVIII Statement showing details of OAN projects commissioned but 181 not handed over as of March 2013 XIX Statement Showing details of DG Sets procured and lying idle in 183 four circles of BSNL XX Statement showing details of periodic penalty levied by DoT & 184 paid by BSNL Telecom Circles for non-compliant (rejected) CAFs during 2009-10 to 2012-13 XXI Statement showing non-recovery of penalty paid by BSNL from 186 defaulters on non-compliance of DoT guidelines for Customer Application Forms (CAFs) at points of sale during the period from 2009-10 to 2012-13 - v - Report No. 20 of 2015 Description Paragraph Page XXII Statement showing details of Cumulative revenue loss sustained 187 by BSNL on porting out of its existing mobile subscribers to other operators networks during the period from 2010-11 to 2012-13 XXIII Statement showing Income-Tax liability of ` 29.78 crore on 188 BSNL due to non-deduction of TDS on trade discount allowed to franchisees as per demand raised by I-Tax authorities and amount paid by BSNL during 2008-09 to 2011-12 Appendices I Summarised position of Action Taken Notes awaited from 191 Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited under Department of Telecommunications, MoC&IT up to the Audit Reports 2014 as of September 2014 II Summarised position of Action Taken Notes awaited from 193 Departments under Ministry of Communications & Information Technology (MoC&IT) up to the Audit Reports 2014 as of September 2014 - vi - Report No. 20 of 2015 PREFACE This Report for the year ended March 2013 has been prepared for submission to the President under Article 151 of the Constitution of India. This Report of the Comptroller and Auditor General of India contains results of performance and compliance audit of the Ministry of Communications and Information Technology. The instances mentioned in this Report are those, which came to notice during the course of test audit for the period 2013-14 as well as those which came to notice in earlier years, but could not be reported in the previous Audit Reports. The audit has been conducted in conformity with the Auditing Standards issued by the Comptroller and Auditor General of India. - vii - Report No. 20 of 2015 OVERVIEW This Report contains significant audit findings which arose from the performance and compliance audit of the Ministry of Communications and Information Technology. It contains six chapters. Chapter I gives a brief introduction of the Ministry of Communication and Information Technology while Chapters II to V relate to present findings/observations arising out of the performance and compliance audit of Department of Telecommunications (DoT), Department of Posts (DoP), Department of Electronics and Information Technology (DeitY) and Public Sector Undertakings (PSUs) under the Ministry. Chapter VI presents a summarised position of the Action Taken Notes furnished by the Departments under the Ministry. Some of the important findings included in this Report are given below: Chapter-II Department of Telecommunications Functioning of TERM Cells in Department of Telecommunications The prime objectives for which TERM Cells have been formed to curb illegal and clandestine activities in the premises of the TSPs, to prevent misuse of telecom networks by the vested interests having no licences and to undertake other vigilance and monitoring activities remained mostly unfulfilled and unattained. The performance in testing of BTS regarding EMF radiation, was not up to the mark and instances were noticed where EMF radiations were above the acceptable level. Further, TERM Cells have failed to discharge their major responsibilities/functions since they have not taken up timely action against the service providers/unauthorized users due to lack of co-ordination with other wings/branches of DoT despite clear-cut instructions issued by DoT from time to time. Due to such failure apart from non-imposition of penalty pointed out through test check, vigilance function of the department was also compromised. Paragraph 2.1 Irregular Amendment of the Telecom Licences to permit Intra-Circle Roaming in June 2008 and its adverse financial impact on the Telecom revenues Amendment in UAS/CMTS licences in June 2008 in irregular manner facilitated unilateral sharing of spectrum by the telecom service providers in the guise of Intra Service Area Roaming (ISAR) without making any payment of one time charge for spectrum holding above 4.4 MHz (GSM) based on reserve price/auction price of auction held on November 2012 (for permission of sharing of spectrum) and the additional spectrum usage charges at - ix - Report No. 20 of 2015 the enhanced rate for combined spectrum holding as applicable comes to ` 8,210 crore and ` 1,394.53 crore respectively. Paragraph 2.2 Hasty merger of Chennai Metro and Tamil Nadu Telecom Circles Merger of Chennai Metro and Tamil Nadu Telecom Circles without any cost benefit analysis of the proposal in 2005 for the CMTS/UAS Licence resulted in undue benefits to the select Telecom Operator to the tune of ` 499.35 crore.
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