Days after the auction of mobile phone spectrum evoked a tepid response, Planning Commission Deputy Chairman Montek Singh Ahluwalia said on Wednesday it was a 'mistake' to have a high reserve price and there was need to relook at the price during the second auction planned later this fiscal.
Ahluwalia, who was part of an Empowered group of ministers that set Rs 14,000 crore (Rs 140 billion) as the base price, said the government which plans to have another auction soon for the unsold spectrum, needs to take a relook at the price.
"I myself had raised the issue that it was a mistake to pitch the reserve price at a level close to that. . ." he told reporters in New Delhi.
"I think in the hindsight it was clear that the reserve price was too high".
The government, which had set a reserve price of Rs 14,000 crore for pan-India spectrum broadly drawing from the basis used by Comptroller and Auditor General in calculating the loss in the previous sale in 2008, managed a meagre Rs 9,407.64 crore (Rs 94.07 billion) in the auction that lasted barely two days.
"But that doesn't matter, we are going to re-auction and you will discover the price," he told reporters on the sidelines of Indo-Japan symposium in New Delhi.
Ahluwalia said several discussions were held to set the reserve price for auctioning the spectrum and the EGoM had "actually lowered the reserve price" from Rs 18,000 crore (Rs 180 billion) suggested by sector regulator Telecom Regulatory Authority of India to Rs 14,000 crore.
"I want to mention here that one or two newspapers criticised that as if by lowering the reserve price we are going to reduce the outcome.
"I had argued very strongly that a healthy auction process will discover the prices whether you fix it at one or two or seven hundred," he said.
Image: Montek Singh Ahluwalia