The government seems set to miss its target of raising Rs. 40,000 crore in this fiscal year through the sale of radio spectrum and a one-time excess fee, and by a large margin.
The government is unlikely to earn more than Rs. 20,000 crore, as the empowered group of ministers (EGoM) has decided to ignore the Telecom Commission’s recommendation that incumbent operators be charged for excess spectrum from the date that they were allotted spectrum.
On October 8, the EGoM decided that the operators should be charged prospectively for excess spectrum.
Under the old regime, telecom licences were awarded along with a start up spectrum of 4.4 MHz. Incumbent operators were allotted spectrum beyond 4.4 MHz without any additional one-time charge. The EGoM decision means that the incumbent telecom service providers will now not be required to pay any one-time fee for the spectrum that they used till October.
If the Cabinet ratifies the EGoM decision, the government stands to forego about Rs. 19,700 crore that it would have otherwise got, had the Telecom Commission decision been implemented in toto.
The two largest GSM operators, Bharti and Vodafone, would have had to pay about Rs. 9,500 crore together.
Even if the Cabinet accepts the EGoM decision, the government can expect to raise only Rs. 27,000 crore. Sick PSUs MTNL and BSNL are unlikely to pay about Rs. 12,000 crore due from them.
As per the staggered payment schedule, the government will get only about Rs. 3,000 cr from excess spectrum fee in this financial year. Similarly, from auction, the government would get only about Rs. 16,000 cr, if operators bid at reserve price.
The Attorney General had recommended that incumbent operators be charged retrospectively from July 2008 for spectrum beyond 6.2 MHz.