Modi may spend S$14.6 billion to bring rural India online

NEW DELHI — India is considering doubling spending on a high-speed Internet grid to connect villages across the country to 700 billion rupees (S$14.6 billion), Communications Minister Ravi Shankar Prasad said.

A committee appointed by the ministry has recommended raising the allocation for the National Optical Fibre Network to enable changes to the project, Mr Prasad said in an interview on Friday (May 15) in New Delhi. Prime Minister Narendra Modi will have to approve the budget increase, according to Mr Prasad.

“It is ambitious,” Mr Prasad said. “We laid down one million kilometres of fibre in a time span of 30 years. Now, we propose to lay down 700,000km in three years.”

An increase in the outlay will help Mr Prasad in the roll-out of the broadband network that will link 250,000 village clusters to the Internet and is central to Mr Modi’s US$18 billion (S$23.9 billion) Digital India initiative. The higher spending could potentially expand opportunities for companies — from local optical fibre suppliers such as Sterlite Technologies and Aksh Optifibre, to telecommunications gear vendors such as Cisco Systems and Huawei Technologies.

Previously, the government had budgeted 360 billion rupees for the broadband grid that is running behind its original schedule for completion by 2013. The US$11 billion plan includes money already spent on the project.

Shares of Sterlite Technologies climbed as much as 9.9 per cent and were trading at 70.95 rupees as of 9.44am in Mumbai, headed for the highest close since Nov 24. The stock was the best performer today on the S&P BSE 500 Index. Aksh Optifibre rose 3.9 per cent.

India is considering allowing private companies to help build the network, Department of Telecommunications Secretary Rakesh Garg said last month. Mr Prasad did not name any private companies that might work on the project.

Almost 1.1 billion Indians remain offline mostly in rural areas, the largest non-Internet user population in the world, McKinsey & Co estimated in a report last year. Low literacy levels and the struggle to afford web access in a nation where more than 700 million people live on less than US$2 per day are among the obstacles the government’s digital push faces. BLOOMBERG