Spectrum revenue a fiscal bonanza for govt

The auction of telecommunication spectrum and proceeds by divesting equity in public sector companies could help the government address about 40 per cent of its fiscal deficit. This is likely to aid an earlier-than-expected return to fiscal consolidation, reports HT Correspondent.

The auction of telecommunication spectrum and proceeds by divesting equity in public sector companies could help the government address about 40 per cent of its fiscal deficit. This is likely to aid an earlier-than-expected return to fiscal consolidation.

HT Image

While auction of third-generation (3G) spectrum is set to cross Rs 60,000 crore, the government can expect to earn between Rs 30,000-Rs 35,000 crore from existing telecom operators who would have pay for additional second generation (2G) spectrum that they hold above 6.2 MHz for which they paid licence fees.

This is significantly higher than the Rs 35,000 crore that the government had budgeted to earn by auction of telecom spectrum in 2010-11.

Besides, disinvestment proceeds will emerge as the major source of revenue in the coming years.

The government plans to raise at least Rs 40,000 crore annually by selling stake in public sector companies.

Finance Minister Pranab Mukherjee has set out a medium-term roadmap for fiscal prudence, targeting reduction of the fiscal deficit to 5.5 per cent of gross domestic product (GDP) in 2010-11, and to eventually bring it down to 4.1 per cent in the next two years.

The projected net fiscal deficit in 2010-11 works out to Rs 3,45,000 crore.