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Budget to get 2G revenues

The government is likely to include estimates of 2G spectrum fee that telecom operators would have to pay after the recent policy decision to delink spectrum from licences in Budget 2011-12. HT reports.

business Updated: Feb 01, 2011 00:07 IST

The government is likely to include estimates of 2G spectrum fee that telecom operators would have to pay after the recent policy decision to delink spectrum from licences in Budget 2011-12.

In a major shift in policy last week, the government said that henceforth all operators would have to pay market price for initial as well additional spectrum. Till date, telecom operators were getting spectrum bundled with telecom licences which had paved the way for low tariff regime and intense price war among service providers. But now, new operators, if their licences are held valid, would have to pay a market price for the additional 1.8 Mhz of 2G spectrum.

For old operators such as Bharti, Vodafone and Idea, who are holding spectrum beyond 6.2 Mhz, they would have to pay market driven price for the extra airwaves. http://www.hindustantimes.com/Images/HTEditImages/Images/01_02_11_business25a.jpg

“The budget will likely contain estimates of additional revenue that the government expects to earn through this process in 2011-12,” an official said requesting anonymity.

The estimates are still being worked out, but going by the methodology adopted by the Comptroller and Auditor General (CAG), the government may end up earning upto R38,000 crore from additional fee of 2G spectrum, the official said.

This latest policy shift might come in as a pleasant surprise for finance minister Pranab Mukherjee and his team of macroeconomic managers who are looking for options to shore up revenue without raising taxes in wake of a runaway price line.

In the current fiscal year, proceeds from auction of telecom spectrum could help the government reduce fiscal deficit aiding an earlier-than-expected return to fiscal consolidation.