Vodafone Idea is in Huge Financial Crisis: Brief Report

Vodafone Idea, a joint venture between Britain's Vodafone Group plc and India's Idea Cellular is facing a crisis after the supreme court ordered the telecom company to pay its unpaid government dues immediately.

Vodafone Idea has said it cannot pay $3.9 billion immediately and the company could survive only if the government agrees to a flexible payment schedule.

In the case of Vodafone Idea's potential exit or bankruptcy India's economy will take a huge hit as the company has 13,000 direct employees and $3.8 billion loans from banks.

According to  Aliasgar Shakir, a research analyst at Motilal Oswal, the ruling government will have to face a revenue loss of 1 trillion rupees ($14.01 billion) if Vodafone Idea exits the market. In other words, India's fiscal deficit will increase by about 40 basis points as per NDTV report.

On the other side, Vodafone Idea's departure will lead the telecommunication sector to a duopoly between Bharti Airtel and Mukesh Ambani owned Reliance Jio.