Spectrum haul trims deficit to 4.47pc

NEW DELHI: The better-than-projected revenue from the 3G and broadband spectrum auctions is likely to reduce fiscal deficit to 4.47 per cent of GDP this fiscal from the budget estimate of 5.5 per cent.

With an additional revenue windfall of Rs 71,262.26 crore from the spectrum auctions, which is over three times the original estimate of Rs 35,000 crore, the fiscal deficit, which was budgeted at 5.5 per cent or Rs 3,81408 crore, will come down to 4.47 per cent or Rs 3,10,146 crore.

Of the overall spectrum revenue of around Rs 1,06,262.26 crore, the government has already received Rs 97,948.46 crore from the 3G and BWA radio waves. Besides, Rs 8,313.80 crore is expected from state-run BSNL.

If BSNL's payment is also taken into account, the government will be receiving Rs 38,543.31 crore from spectrum auction for BWA, while it got Rs 67,718.95 crore from radiowaves for 3G.

Internet services provider Infotel Broadband Services, which was acquired by Mukesh Ambani-led Reliance Industries last week, emerged as the only pan-India winner for BWA spectrum for Rs 12,872.52 crore.

Higher inflows would have positive implications for fiscal deficit, which is the difference between total expenditure and total revenue that the government meets through borrowings.

Global investment banker Barclays Capital had earlier projected fiscal deficit to decline to 4.5 per cent in 2010-11 on the basis of the 3G spectrum auction results alone. Barclays, however, said it does not foresee any major change in the government's borrowing calendar for the first half of the current fiscal.

"However, the chances of a second half borrowing being lower than currently projected (Rs 1.7 lakh crore) have risen significantly (after the mega success of the 3G spectrum sale)," it said.

The government has estimated its gross market borrowings this fiscal at Rs 4.57 lakh crore, most of which will come in the first half of this fiscal.

Earlier, Finance Minister Pranab Mukherjee had said revenue from the 3G spectrum auction would help reduce the fiscal deficit. "Of course it (3G revenue) will provide me an elbow room. Please allow me to use it in the best possible manner," he had said.

The government has projected fiscal deficit at Rs 3.18 lakh crore for 2010-11, which is 5.5 per cent of GDP estimate.

Fiscal deficit targets had gone awry after the government provided incentives to industry to combat the impact of the global financial crisis triggered by the collapse of America's iconic investment banker Lehman Brothers in September, 2008. As part of the three stimulus packages, it cut taxes and raised public expenditure to aid the recovery.