To add to the woes of the industry, the budget had included Rs 2,800 crore as non-tax revenue receipts as licence fees from basic and cellular operators.

According to the industry, while on one hand the budget proposals have opened up a new avenue for financing by being able to tap the provident funds, there has been no move to alleviate the state of the industry.

"We are deeply disappointed by this budget as there has been no support for us in this. It has only made our survival more difficult," said TV Ramachandran, executive vice chairman, cellular operators association of India(COAI).

According to Ramachandran, by budgeting Rs 2,800 crore as revenues from payment of licence fees by basic and cellular operators, the financial health of the operators will be badly affected. "Even last year the defaults on licence fee payments by the cellular operators remained high at 50 per cent or Rs 1,000 crore. This year it will be mopre difficult for the government to collect the licence fees as the operators have no money," he said.

According to the industry, core issues that will help the industry have not been addressed. "The thrust given to information technology is sadly missing in telecom, especially at a time when the two are converging," said an industry analysts.

According to the industry, as the duty on handsets have remained unchanged at a total of 53 per cent and the duty on telecom software being reduced marginally from 40 to 30 per cent, one can't expect any major growth due to the budget which would have helped the industry.

"As long as the projects remain unviablecreating new avenues of finance will not help as nobody will be willing to invest in them," pointed out an industry observer adding that saying it will be virtually impossible for cellular companies to get investment grade rating from the crediut rating agencies. He added that while the metro cellular operators might not face such a big problem, for the circle operators the problem will be more acute."It will only further delay financial closures which anyway very few companies have been able to achieve," said Ramachandran.

However, the clarifications on section 10 (23G) of the Income Tax Act, which permit tax free infrastructure bonds, many companies will be able to raise some money through this route. Also, industry observers feel that with either corporate guarantees or guarantees from financial institutions at least some of the telecom companies will be able to tap the new sources of funds. However, they felt that the government will have to come out with some measures to address the long termviability of the telecom projects.