Thanks to the third-generation (3G) mobile licence bonanza, which is expected to generate over Rs 40,000 crore (Rs 400 billion) for the central exchequer this year, the fiscal deficit may stand at 1.75 per cent of GDP in 2008-09, lower than the 2.5 per cent projected in the Budget.
The deficit could be even lower if the impending 3G auction were to yield more money, all of which would go to the central exchequer's kitty as non-tax revenue. However, the auction is expected to provide a one-time boost to the Centre's fiscal situation in 2008-09.
The government is facing pressure on the fiscal front this year on account of rising oil, food and fertiliser subsidies, as well as the additional liabilities that it will have to incur in implementing the Sixth Pay Commission award.
Speaking to Business Standard, Finance Secretary Duvvuri Subbarao said: "It is virgin territory and the estimate of revenue flows is at best an educated guess."
Subbarao said the 3G auction process should be conducted in a way that exploits the competitive forces and maximises the revenues.
"We gather from the Department of Telecommunications that the auction revenues will come in during this fiscal. The important thing, from a public finance perspective, is to remember that this is a one-time inflow and we should treat it as such," he added.
Announcing the 3G mobile policy earlier this month, Communications Minister Andimuthu Raja had said the auction was expected to generate between Rs 30,000 and Rs 40,000 crore (Rs 300 and Rs 400 billion). The auction is expected to begin in September or October.
Telecom industry experts say each nationwide licence for 3G services would go for at least $2 billion (or around Rs 8,400 crore or Rs 84 billion). Assuming that six nationwide licences are issued, the government could well raise up to Rs 52,000 crore (Rs 520 billion), they added.
Regardless of the actual numbers, the auction money will go into the other non-tax revenues of the central Budget.
In 2007-08, the government received Rs 21,533 crore (Rs 215 billion) as telecom licence fee, much higher than the budgeted Rs 9,902 crore (Rs 99 billion). Of this amount, as much as Rs 12,500 crore (Rs 125 billion) came from the one-time entry fee for dual technology licences and new mobile licences issued to operators.
For 2008-09, the government has budgeted collections of nearly Rs 13,954 crore (Rs 139.54 billion). It is clear that it will exceed this year's target too. Overall non-tax revenue in 2008-09 is estimated at Rs 95,785 crore (Rs 957.85 billion).
Also see
All about 3G and what it means for you
3G: Third generation problems
All you want to know about 3G spectrum
