3G spectrum auction rings in Rs 32,719 cr windfall | delhi | Hindustan Times
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3G spectrum auction rings in Rs 32,719 cr windfall

delhi Updated: May 20, 2010 09:26 IST
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The auction of 3G wireless spectrum to provide mobile phone customers with services such as video phone calls turned into a thumping success for the government, bringing an unexpected Rs 32,719 crore. The figure is more than the Rs 35,000 crore budgeted for by the government and can wipe out nearly 10 per cent of the current fiscal deficit of 3.5 lakh crore. Which means that the government could be dipping less into your pocket for taxes. But this success also highlights the losses made in the controversial 2G auctions earlier.

After companies led by Vodafone, Bharti Airtel and Reliance aggressively competed in the 34-day auction, the government was set to get Rs 67,718.95 crore from the bids, compared with the Rs 35,000 crore it had envisaged. The winning companies have to pay up the bid amounts within 10 days.

The high bids also contrasted the controversial pricing of 2G spectrum by the government at lower rates on a first-come-first-served basis in 2008, possibly pleasing critics who had said the prices charged then for scarce spectrum were too low.

Besides 3G money, the Centre can also expect to earn at least Rs 20,000 crore more by the auction of spectrum for broadband wireless access (BWA), scheduled to commence later this week.

In all, the Centre is set to earn Rs 88,000 crore from the auction of premium radio waves “I calculated Rs 35,000 crore (revenue from 3G and broadband wireless spectrum sale) in the Budget. I’m getting Rs 67,000 crore, almost double. So, (I will get) that much elbow room,” said Finance Minister Pranab Mukherjee.

“We’re happy to fetch Rs 67,718.95 crore through 3G auction, which is beyond our expectation. Since all existing operators have got spectrum, they can launch services immediately after getting spectrum,” A. Raja, Communications and IT Minister told HT.

Fiscal deficit mirrors the extent to which the government is borrowing to fund current expenditure. High levels of government debt limit headroom for it to spend more on development programmes.

The government has budgeted for a net fiscal deficit of Rs 3,45,000 crore in 2010-11. It now appears the additional revenue from the auction of 3G telecommunication spectrum will bring down the deficit by about Rs 55,000 crore.

Mukherjee has set out a medium-term roadmap to return to fiscal prudence, targeting to reduce fiscal deficit to 5.5 per cent of GDP in 2010-11 and eventually bring it down to 4.1 per cent over the following two years.