Wrong to see 2G auction impact on fisc deficit: Sanjeev Aga

The telecom spectrum auction began today amidst a lukewarm response from companies. Telcos were interested in certain select circles and stayed away from bidding for pan-India radiowaves. Sanjeev Aga, former CEO of Idea Cellular said, it is wrong to look at the impact of 2G auction on fiscal deficit. He also believes that the way the auction has panned out is not very desirable.

Here is the edited transcript of the interview on CNBC-TV18.

Q: It's the sixth round and we know that it's likely to continue till the auction hours are open, that is 7 pm. In terms of the clock speed, I think this is the average clock speed that was seen in the previous auction but just to recoup the numbers for your benefit effectively, what we are seeing is that as of now only Rs 9200 crore is the bid amount. The government's own budget target for spectrum realization in the current fiscal was Rs 40,000 crore and therefore, if you recall what happened in 2010, is it just first day slow take off or does it point to something far more serious?

A: I think with the handicap of not knowing where things precisely are and where it will end, forget the fiscal deficit. It is the wrong end of the stick to start looking at the whole sector. This sector is a huge driver of GDP or it can be a huge drag on sentiment depending on whether it is well managed or mismanaged.

If you look at the Supreme Court order, the order envisaged the cancellation of something in the range of 500 and 600 Mhz of spectrum between the 22 circles. The 800 spectrum was not bid at all and from what you tell me it appears that half the spectrum of the balance would not receive a bid. We are looking at a situation where approximately one quarter of the quashed spectrum will be reissued and three quarters will end up with effect of having been confiscated.

That may or may not be the intention but that is the end result. In a way the whole idea of quashing was to take spectrum from one pocket and reissue the entire spectrum. If you have a system by which three quarter is taken away, what has been the end result of all this? It is something bizarre. You will have three quarters of the spectrum in limbo and this will be eventually dealt with in a manner that the government thinks right. It is certainly not in line with what the Supreme Court had in mind. I did have some problems in the Supreme Court order in terms of its randomness of, but this is not a very desirable outcome.

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