Bid to plug fiscal gap via spectrum sale

New Delhi, Oct. 9: The finance ministry wants the telecom department to auction around 20 megahertz (Mhz) of broadband spectrum to rein in fiscal deficit, which many fear will inflate beyond the target of 4.6 per cent of GDP.
Top finance ministry officials have been coaxing the telecom department, led by Kapil Sibal, to agree to an auction of the broadband space available.
Last year, the government earned over Rs 1 lakh crore from the sale of 3G and broadband spectrum.
Officials said that the auction of spectrum, which is in pockets, could fetch at least Rs 14,000 crore, based on last year's trends, but might actually go up to Rs 40,000 crore given that the broadband air waves could be used in rolling out fourth-generation (4G) telecom services that offer high-speed connectivity to users even on trains and aircraft.
In this year's budget, finance minister Pranab Mukherjee has estimated non-tax revenues of Rs 29,648.33 crore from the auction of broadband wireless access spectrum, licence fee and spectrum charges from mobile operators. Broadband wireless spectrum allows companies to offer high-speed Internet and real time data services such as video on demand and live television.
The department of telecom (DoT) has around 20Mhz of broadband spectrum for sale in most of the 22 telecom circles, including the lucrative circles of Delhi and Mumbai, which can accommodate one more player in each circle.
The scattered nature of the broadband available, however, caused the telecom department to hold back the auction as it was not sure about finding buyers for these spectrum pockets.
The finance ministry is believed to be keen on sticking to the tried and tested auction route, especially after the controversy over the first come, first served policy for selling telecom air waves.
According to the DoT's Wireless Planning and Coordination wing, there is another 20Mhz of pan-India broadband spectrum available in the 2.5-2.69Ghz band, which is used globally to provide 4G services such as high-speed video blogging, video on demand, Internet television and online gaming.
The telecom regulator is also planning to come up with recommendations on 4G auctions, which will be studied by the government before finalising the auction road map.
Officials say they plan to roll out the auction in such a manner that the government receives the money within this fiscal year.
The fiscal deficit for just five months from April to August was 66.3 per cent of the target estimated for the whole fiscal. Though North Block officials dismiss this as "normal", the higher spending to earning ratio and a increase in subsidy outgo has prompted the government to announce that it can borrow another Rs 52,800 crore on top of an annual borrowing limit of Rs 4.17 lakh crore.
Rating agency Standard and Poor's has also said India may slip on its fiscal deficit while forecasting the deficit at around 5.7 per cent of the GDP.