2G spectrum auction flops

Nov 15 2012, 04:22 IST
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2G spectrum auction flops 2G spectrum auction flops
SummaryThis was contrary to high valuation estimated by CAG in its damning report of UPA govt.

the government has promised to refund the license free paid in 2008, the net gain to the exchequer may be almost nil.

Dismissing allegations that companies colluded with the government, Sibal said "We have done exactly what the courts asked us to do. Infact the court asked us to sell (spectrum at a minimum price of) Rs 18,000 crore, we brought the price down because we wanted to sell, we wanted companies to buy."

"If we had fixed it at Rs 18,000 crore in terms of what Trai had recommended, this (even Rs 9,407 crore ) would not have been fetched," he added.

Lamenting the mess in the sector, Sibal said, "the consumer has not benefited at all because the nature and the kind of investments that ought to have gone into the sector have stopped and the sector has been in debt."

As per the provisional result, Vodafone emerged as the biggest winner getting additional spectrum in 14 circles of Jammu and Kashmir, Assam, Himachal Pradesh, Uttar Pradesh (East), Uttar Pradesh (West), Madhya Pradesh, Gujarat, Haryana, Bihar, Kerala, Orissa, North East, Punjab and Kerala.

Its market competitor Bharti Airtel managed only in Assam circles.

Poor response to 2G spectrum auction to swell fiscal deficit

Poor response to the 2G telecom spectrum auction is likely to make it difficult for the government to keep in check fiscal deficit and meet the revised target of 5.3 per cent of the Gross Domestic Product (GDP) in 2012-13.

As against the target of Rs 40,000 crore, the 2G spectrum auction, which concluded today, would fetch only Rs 9,407 crore. This was much less than the reserve price of Rs 28,000 crore fixed by the Telecommunications Ministry.

It is also unlikely that the entire amount would be available in the current fiscal as the telecom companies would have the option to stagger payment over three years.

In view of rising oil and food subsidy bill and subdued revenue collection, the government had increased the fiscal deficit target for 2012-13 to 5.3 per cent from 5.1 per cent estimated in the budget.

This too now seems difficult in the backdrop of tepid response to 2G spectrum auction and the disinvestment plans which have so far remained a non-starter.

As regards disinvestment, although the government has proposed to raise Rs 30,000 crore from stake sale in the state-owned enterprises, not a single PSU has hit the market in the first seven months of 2012-13.

The government had

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