The Government may be on a sweet spot on the telecom revenues front, with the Supreme Court directing the telecom regulator to make fresh allocation of 2G spectrum in 22 service areas by auction route.
Auction of 2G spectrum is likely to translate into substantially higher revenues for the Government than what it got (licence fees of about Rs 9,000 crore) in 2008. But it may not be a “windfall”, as was the case from the auction of 3G spectrum in 2010-11.
The Government also gets to keep the Rs 9,000 crore it collected in 2008.
The reason for tempered optimism on higher revenues from the auction route is that the supply of 2G spectrum will go up substantially, but demand may not be that robust, say telecom industry watchers. The number of players who may bid for 2G may not be as many as in 3G spectrum. The Government will certainly not land on a bounty this time round even if the auction route is adopted, they say.
However, there was a spring in the steps of senior Finance Ministry officials after the judgment. With the Government desperately searching for revenues to bridge the yawning fiscal gap, any additional revenue will be welcome, official sources said.
Another interesting aspect is that the Government may not be able to book additional revenues this fiscal as fresh issue of licences and 2G spectrum auction may not materialise before March-end, sources said.
The Centre had mopped up Rs 1.06 lakh crore from 3G spectrum auction and wireless broadband in 2010-11.
This was against a budget estimate of Rs 35,000 crore made on this account that year.
Reacting to the court's rulings, the Finance Minister, Mr Pranab Mukherjee, told reporters that the Government would examine the judgments and its implications.
Meanwhile, Advocate Mr Prashant Bhushan, who represented a petitioner (Centre for Public Interest Litigation) maintained that the telecos should “refund the benefits” that they made by getting the licences 'illegally'.
Another petitioner, Dr Subramanian Swamy, claimed the Government's finances will get a boost when 2G spectrum and licences are granted after fresh auction.