The 3G spectrum auction that is set to commence on Friday could come to the government?s help in meeting its fiscal deficit reduction target.
The Centre had set the target to reduce fiscal deficit to 5.5% of the gross domestic product (GDP) in Budget 2010-11 after factoring in a substantial jump in non-tax revenue. It intends to garner Rs 35,000 crore from spectrum auction and another Rs 40,000 crore through disinvestment.
In fact, the non-tax revenue estimates for this fiscal is Rs 1.48 lakh crore, up 30% over the revised estimate for last fiscal.
If optimism is the key word, the revenue kitty could even be enriched by Rs 60,000 crore from the spectrum auction alone. If that is the case, fiscal deficit would be 5.1% for 2010-2011.
India?s fiscal deficit — an indicator the revenue-expenditure gap — went up to 6.7% for the last fiscal on account of economic downturn the country was facing. In this situation, revenue from the spectrum auction could have been a boon if it had taken place in that year, but that was not to be.
An amount of Rs 49,799 crore has been included in the ?other communication services? head in the non-tax revenue that comes to the government. Expecting the auction to happen last year itself, the government had accounted for it in the Budget for last year as well but it did not take place.
On Thursday, exuding optimism, telecom minister A Raja when asked about the auction, said, ?I cannot anticipate or foresee all these things?what is wrong if the government expects even Rs 60,000 crore. Aspiration of the government is something different… what is going to come we cannot say.?
The government, in an attempt for fiscal consolidation is determined to bring down the fiscal deficit to 5.5% and the revenue deficit to 4% this fiscal. Revenue deficit last year, as per the revised estimate, was a worrisome 5.3%.