The government on Thursday approved change in funding arrangement for schemes under the Universal Service Obligation Fund including rolling out of a national network for broadband services in the country.

"The Cabinet today approved the proposal to change in funding arrangement for the Univsresal Service Obligation Fund (USOF) schemes including funding of the scheme for creation of optical fibre network from non-plan to plan in the budget," Finance Minister P Chidambaram said here.

The USOF was created under the National Telecom Policy, 1999, for providing access of telecom services to people in rural areas at affordable prices.

Through National Optical Fibre Network (NOFN), the government aims to connect and provide broadband services across 2.5 lakh panchayats in the country.

"NOFN, which is approved in October 2011, will be completed by December 2013," Chidambaram said.

The proposal of Department of Telecommunications was based on the advice of the Department of Economic Affairs, an official release said.

"... suggested that the funding of USOF schemes including the scheme for creation of National Optical Fiber Network (NOFN) should continue to be financed out of the Plan allocation for better appraisal, monitoring and performance evaluation," the statement added.

It further said that accordingly a note was submitted for approval of the Cabinet on October 4 for reverting to the earlier arrangement for allocation through Plan Head, as implemented by the Ministry of Finance from the financial year 2011-12 onwards.

Earlier the Department proposed to restore the budgetary allocations towards USOF expenditure under Non-Plan Budget to avoid procedural delays and ensure timely allocation of funds, while submitting the proposal regarding scheme for creation of the National Optical Fiber Network (NOFN) for Broadband connectivity to Panchayats, the statement said.