2G auction ends in two days, half of blocks unsold

The auction of 2G telecom spectrum ended on a disappointing note for the government on Wednesday, just the second day of the process, with the Centre earning only Rs 9,407.64 crore and more than half the blocks of airwaves on offer remaining unsold.

The revenue collection is far short of the budget estimate of Rs 40,000 crore, a figure that was subsequently revised to Rs 30,000 crore. The auction was also wrapped up in just two days, in stark contrast to the 3G spectrum auctions of 2010 which went on for more than a month and fetched Rs 67,000 crore.

The 2G auctions began on Monday and the government earned Rs 9,224.75 crore on the first day. There was no auction on Tuesday due to the Diwali holiday. The tepid response could upset the government's efforts to meet the revised fiscal deficit target of 5.3 per cent of GDP set for 2012-13, analysts said.

"In all, 101 out of the 144 blocks of spectrum on offer got bids. Metro cities of Delhi and Mumbai, which accounted for 40 per cent of the base price of Rs 14,000 crore for 5 MHz of 2G spectrum, drew no bids," telecom minister Kapil Sibal told reporters after the process ended on Wednesday.

The numbers are also short of the notional loss — Rs 35,000 crore to Rs 1,76,000 crore - the Comptroller and Auditor General's report said the country had suffered due to the government giving away spectrum on a first-come-first-serve basis in 2008. The auctions had become necessary after the Supreme Court, after the CAG audit, cancelled in February 122 telecom licenses given in 2008 by then telecom minister A Raja and ordered them to be auctioned instead.

Sibal said he did not wish to comment on the CAG report. "I do not want to comment on any institution but the facts are in front of the nation. The nature of the market in 2008, 2010 and 2012 are very different. It is very dangerous to extrapolate and take the situation in 2010 and apply in 2008 and similarly apply 2012 to 2008," Sibal said.

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