Budget 2012: Defence forces to get Rs 5,000 cr for vacating wireless spectrum

NEW DELHI: The government is likely to sanction 5,000 crore to the defence forces for an exclusive secure optical fibre network in the upcoming Budget, a move that will free up for commercial use about 45 Mhz of wireless spectrum that the forces currently use.

"The proposal is likely to be cleared soon and will be announced in the budget. It will not only help defence beef up its system but also give the government a revenue source," a government official told ET.

According to estimates of the Department of Telecommunications (DoT), auctioning just 50% of the airwaves that the defence ministry will vacate can bring at least 85,850 crore to the exchequer. Such a move will also help ease the strain of fiscal consolidation measures on government resources over the next two years.

The financial proposal, floated by state-run Bharat Sanchar Nigam Ltd ( BSNL) in September, has the approval of an inter-ministerial group (IMG) and the ministries of defence and finance. A nod from the Telecom Commission, though, is still pending.

"The IMG has given its clearance and the Telecom Commission is also going to meet in a few days to clear it. The commission had earlier recommended it but there were some problems. Now it will be cleared," the official said.

The sanctioned funds will primarily go to BSNL, which is entrusted with the job of laying the network. The state-run telecom firm has already started work on the network that will be used by the army.

With the allocation, the overall cost of the project will rise to 13,098 crore, of which the cabinet has already approved 8,098 crore.

Auction of broadband wireless spectrum in 2010 had brought in 38,543 crore ($8.25 billion) for the government, which was twice the amount predicted by analysts. The 3G and broadband spectrums jointly fetched 1,06,000 crore, against the 35,000 crore estimated by analysts. This helped the government reduce its fiscal deficit to 5.1% from an earlier estimate of 5.5% for the 2010-11 fiscal.

According to the fiscal deficit trajectory recommended by the 13th Finance Commission, the government has to bring its fiscal deficit down to 3% by 2013-14.