The Indian government is in favour of merging state-run telecom firms BSNL and MTNL, and their unions have also given a nod, Minister of State for Communications and IT Shakeel Ahmad said Wednesday.

"The government is in favour of the BSNL-MTNL merger. The unions have also agreed to the proposal," Ahmad told reporters here.

The communications ministry is examining the modalities and the route of the proposed merger as per the recommendations of the I-Sec consortium, he said.

"A formal decision will be taken within the first quarter of fiscal 2006-07. The matter may be sent directly to the cabinet for approval after a decision on the proposed merger is taken by the ministry," Ahmad said.

The ministry is looking at ways to reduce traffic congestion in communication systems, the minister said. "The much talked about 'Indiaone' service will be launched by March 31, 2006," he said.

Ahmad was in the city to launch the KMC-NET project. BSNL is a partner with the Kolkata Municipal Corporation (KMC) in the Rs.169 million Department for International Development, a Britain-funded project.

The project includes an online connection of KMC's 223 offices. The project, to be completed by July 2006, would make corporation related information available on the Internet for common citizens.

Videoconferencing facilities would also be provided in 15 locations to enable hassle-free e-governance by the corporation.