2G auction, SAIL stake sell-off likely to better govt’s fiscal status

With the empowered group of ministers (EGoM) finally firming up its view on the reserve price for spectrum auction, and the Cabinet approving disinvestment of 10.82 per cent stake in Steel Authority of India (SAIL), indications are that the government may be in a comfortable position to meet the ambitious fiscal deficit target of 5.1 per cent of the GDP.

The EGoM on Friday decided to recommend to the Cabinet a reserve price between Rs 14,000 and Rs 16,000 crore for pan-India spectrum of 5 Mhz with existing spectrum usage charge of 3-8 per cent. Given this figure, the 2G auction, as directed by the Supreme Court in February, is likely to fetch around Rs 60,000-70,000 crore to the exchequer, as against the budgeted Rs 40,000 crore.

This could immensely improve the fiscal position, which went amok at 5.9 per cent of the GDP in 2011-12, on the back of unbridled expenditure and the failure to achieve the disinvestment target.

The government Thursday cleared the disinvestment of government equity in SAIL, which is likely to mop up over Rs 4,000 crore, as per the current share price of the company on the domestic bourses. Further, the cabinet also gave a nod for demerger of surplus land in VSNL into a separate company. The land, which has been lying unused since the acquisition of VSNL by Tata Communications in 2002, is estimated to fetch Rs 6,150 crore to the exchequer.

In 2012-13, the government has budgeted Rs 30,000 crore from the disinvestment proceeds and Rs 40,000 from the spectrum auction vacated by the cancellation of 122 licences.

"The government is certainly in a more comfortable position because the kind of gloom that had settled in 3-4 months back seems to have lifted. So to that extent, it is certainly better. But the overall growth has to improve," Saugata Bhattacharya, Senior Vice President, Axis Bank, said.

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