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Policy & Regulation
Government’s fiscal deficit target goes haywire, thanks to Spectrum auction
Manoj Gairola |  |  07 Oct 2016

Either the government was too ambitious or it was mislead by some over enthusiast officials of the department of telecommunications (DoT). All calculations of the finance ministry on fiscal deficit targets have gone haywire, thanks to failure of Spectrum auction.

Now, the government will have to raise additional Rs 32000 crore to meet the fiscal deficit target of 3.5 per cent of gross domestic product (GDP) for 2016-17. During this fiscal, the government will get only half of the Rs 64,000-crore it had budgeted from spectrum sale.

The government will receive Rs 65,789.12 crore from Spectrum sale over a period of 10 years. It will get only Rs 32,000 crore in the current financial year. Non-tax revenue, under which Spectrum sale is categorized, was just Rs 1.05 lakh crore in the first five months of 2016-17, constituting 32.5 per cent of Rs 3.23 lakh crore of the budgeted amount.

This is less than half of 61.2 per cent compared to the corresponding period of 2015-16. In the first five months, the fiscal deficit shot up to 76.4 per cent of Rs 5.34 lakh crore budgeted for 2016-17.

Fiscal deficit was at 66.5 per cent of the Budget Estimate (BE) in the first five months of 2015-16. The government will get almost Rs 15,000 crore as taxes, penalty and Krishi Kalyan Cess from more than Rs 65,000 crore worth of declarations under the four-month black mon.

Earlier, the largest Spectrum sale in India closed on Thursday with Vodafone India and Bharti Airtel emerging as the biggest buyers of 4G airwaves, followed by Reliance Jio Infocomm and Idea Cellular. All seven mobile phone operators in the fray for the record over 2300 MHz of airwaves, however, gave the expensive 700 MHz band — considered the best for 4G services — a miss, blaming the high starting price and called on the government to reduce prices and put it up for sale again.

Vodafone spent over Rs 20,000 crore, Airtel Rs 14,244 crore, Jio Rs 13,672 crore and Idea Rs 12,798 crore to beef up 4G airwaves as the battlefield moves from voice to data for growth. The auctions were critical for Vodafone – fresh from an infusion of over Rs 47,700 crore from its parent – and Idea, which needed to boost their 4G footprint to match the pan-India holdings of Jio and Airtel.

    
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07 Oct 2016(IST)  
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