Even as India has become home to the world's third largest telecom network with over 270 million telephone users, the Economic Survey on Thursday pointed out that rural connectivity remained a critical dimension of the massive growth achieved in the recent past.

The government has set an ambitious target of providing 200 million telephone connections in the rural areas by the end of 2012, the Survey, tabled in Parliament, said.

The rural teledensity currently stands at 7.9 per cent with 63.68 million rural connections at the end of November 2007 and the government is targeting to raise it to 25 per cent by 2012.

The Survey also pointed out that the number of wireless subscribers, which exceeds fixedline consumers, is increasing at a fast pace. The total number of telephones has increased from 76.53 million on March 31, 2004 to 272.88 million on December 2007.

The teledensity has also increased from 12.7 per cent in March 2006 to 23.9 per cent in December 2007. The urban teledensity stood at 60.04 per cent at the end of November 2007.

"Telecom development in rural areas assumes special significance in India as more than 70 per cent of the population lives in villages. A well spread out provision of affordable telecom services in rural areas enhances the ability of people to participate in market economy, which in turn improves their productivity and contributes to their earnings," the Survey said.

A scheme has been launched by the government to support development of 7,871 infrastructure sites for mobile services, spread over 500 districts in 27 states of the country.

The infrastructure will be shared by the service providers for mobile services in the specified rural and remote areas, where there is no existing fixed wireless or mobile coverage.

Mobile services, through these shared towers, are targeted to become operational in a phased manner by May 2008. The government also plans to increase the number of broadband subscribers in the country to 20 million by 2010 from 2.8 million as on December 31, 2007.

The total Internet user base is also expected to reach 40 million from 9.7 million as on September 30, 2007. Recognising the potential of broadband services in the growth process, the Survey said connections would be provided to all secondary and higher secondary schools, public health care centres and gram panchayat, besides linking block headquarters to the nearest exchanges.

The share of private sector in the total telephone connections has increased from 39.2 per cent in 2004 to 72.4 per cent in December 2007. "Opening of the sector has created an impressive forward momentum in India resulting in massive investment and expansion with technological changes and improvement in quality of telecom services," the Survey said.

The total FDI equity inflows in the telecom sector from August 1991 up to July 2007 have been Rs 20,718 crore (Rs 207.18 billion), which is 8.1 per cent of the total FDI inflows into the country during the period.

Economic Survey 2007-08: Complete Coverage