With increased focus on telecom services, the government has raised the total Plan outlay of department of telecom by 21.79 per cent over last fiscal to Rs 11,801.01 crore (Rs 118.01 billion) in 2005-06.

State-run BSNL, which has been entrusted with the task of connecting the rural India in a major way, has been given a major chunk of this outlay at Rs 9,696 crore (Rs 96.96 billion), an increase of over 46 per cent.

MTNL [Get Quote] received a lower support at Rs 1,887 crore (Rs 18.87 billion) for the current fiscal against Rs 2,220 crore (Rs 22.2 billion) in the last fiscal.

C-DoT, a telecom research organisation, has been provided Rs 49.40 crore (Rs 494 million). In the last two fiscals, the allocation for C-DoT was nil. With DoT encouraging R&D in telecom, C-DoT is expected to play a bigger role.

Union Finance Minister P Chidambaram has proposed Rs 1,200 crore (Rs 12 billion) for 'USO Fund' for rural telecom connectivity. But the money for 'USO Fund' comes from the Consolidated Fund of India. Operators contribute five per cent of their gross revenue towards USO Fund.

The Budget has taken cellphones out of tax filing obligation.  Besides mobile phones, the Budget 2005-06 has also taken note of the tele-density in the country, currently at 8.75 per cent.

The government has expressed concern at the low rural tele-density. The Budgetary allocation for Universal Service Obligation of the Government to provide telephone connectivity in remote and rural areas, however, remains flat at Rs 1,200 crore (rs 12 billion) in 2005-06, the same as last fiscal.