The government has formed a special purpose vehicle, Rajiv Gandhi National Information Super-Highway (RAJNISH), for setting up the national optical fibre network in the country.

"The government has set up a special purpose vehicle to carry out the work of national optical fibre network in the country. The name of the new company is Rajiv Gandhi National Information Super-Highway (RAJNISH)," a source close to the development said.

Last year, the Cabinet had approved an investment of Rs 20,000 crore for creating a national optical fibre network (NOFN) that is aimed at providing broadband connectivity to Panchayats and offering governance, banking and health services online.

A similar amount of investment is likely to be made by the private sector complementing the NOFN infrastructure while providing services to individual users.

As per a study conducted by the World Bank, with every 10 per cent increase in broadband penetration, there is an increase in GDP growth by 1.4 per cent.

Initially, the broadband project will be executed by state-owned Bharat Sanchar Nigam Ltd (BSNL) and other institutions like RailTel.

Later on, Power Grid and Gas Authority of India would also be made partners.

The NOFN will also provide high bandwidth connectivity for electronic delivery of services to citizens.

The proposed NOFN will enable effective and faster implementation of various mission mode e-governance projects amounting to about Rs 50,000 crore initiated by Department of Information Technology as well as delivery of a whole range of electronic services in the above areas by the private sector to citizens in rural areas.

According to telecom regulator Trai, the number of broadband subscribers at the end of November 2011 stood at 13.13 million.