Current Affairs: What is AGR?

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In the recent news, if there is any issue which is dominating the ‘Business page’ of any leading newspaper is Adjusted Gross Revenue ( AGR). All the leading newspapers are currently covered by the problem caused to telecom companies due to AGR. But, what exactly is AGR? How it started? What is the issue? The current status. All these questions must be popping in your head. Hence, we will be covering everything from scratch in this article to tell you exactly what this issue is all about.

What is Adjusted Gross Revenue (AGR)?

AGR is an acronym used for Adjusted Gross Revenue. It means all the revenues generated by telecom companies through dividend, Hand set sales, Rent and profit from scrap sale. And this definition is cause of all the tussle going on between Government Of India and Telecom companies. Let’s have a look at the past to understand how?

Background Of the Issue

In 1999, when telecom companies operators switch to the new system offered by the Government of India. This news system is known as Revenue- Sharing Model. According to this model, Telecom companies agreed to share a certain percentage of revenue with the Government of India as a license fee. This shared revenue as agreed by the telecom companies is AGR. In the begining, the AGR which was fixed was 15% which was later reduced to 10% and finally to 8% in 2013.

Addressing the Issue

The issue is the difference in the definition of AGR by GOI and by telecom companies. According to the telecom operator, AGR include the revenue generated just from the core telecom services. On the contrary, GOI contended that AGR also include Dividends, Handset sales, Rent & Profit from the scrap sale.

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Supreme Court Verdict

A bench of justices led by Arun Mishra, S Abdul Nazeer and M R Shah rejected almost all the contentions of the telecom companies and gave the verdict in the favour of the centre. According to the statement released by the Supreme Court- “The definition of AGR is crystal clear in the agreement. The process of arriving at the adjusted gross revenue is also crystal clear. Hence, the contentions by the telecom companies that the revenue has not been defined in the contract cannot be submitted. The definition of the gross revenue is defined, one cannot depart from it”.

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