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Poor response to 2G auction to swell fiscal deficit

Wednesday, 14 November 2012 - 8:52pm IST | Place: New Delhi | Agency: PTI
Not only will it tough to meet the revised GDP target of 5.3%, but also unlikely that the entire amount is be available in the current fiscal, given that the telecom companies would have the option to stagger payment over three years.

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% of the gross domestic product (GDP) in 2012-13. As against the target of Rs40,000 crore, the 2G spectrum auction, which concluded on Wednesday, would fetch only Rs9,407 crore. This was much less than the reserve price of Rs28,000 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% from 5.1% 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 Rs30,000 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 recently postponed stake sale in large companies — Rashtriya Ispat Nigam Limited and aluminium major Nalco.

The finance ministry, however, had been maintaining that the disinvestment target of Rs 30,000 crore would be met. The government will take a call on disinvestment of Nalco in January after the release of the financial results by the public sector company.

"The second quarter results are not representative of the company’s valuation. In October, there is a little visible improvement. So, we decided that it will be good to do it in the third quarter," disinvestment secretary Mohammad Haleem Khan had said.


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