India should use the money earned from 3G auctions meaningfully

In the great 3G saga, everything has been discussed-from spectrum allocation, pricing, delays, operators' strategies, etc. With the auctions finally starting, a sneak into the future role of the government perhaps will only be able to ensure the success of the technology and also its stakeholders.

Pricing and profits have been a debatable issue in 3G auctions right from its inception. The revenue that will be earned from the 3G auctions will undoubtedly be of immense value for the government as Finance Minister, Pranab Mukherjee is eyeing the revenues earned post 3G to meet his fiscal deficit target of 5.5% for 2010-11 from 6.7% in 2009-10.

Pranab Mukherjee in his budget estimates last year had pragmatically estimated a sum of Rs 20,000 crore as the expected revenue. But the latest Union Budget estimate of 2009-2010 includes a sum of Rs 35,000 crore with the government likely to get billion dollar bids for all India 3G licenses.

Any new lease of technology spurs the nation for an economic growth as is being expected post 3G. The role of the government does not end after the auctions, in fact the actual role of the government starts from there. The 3G/BWA services are not only been seen from the pure entertainment perspective; rather the country has some visionary plans like m-governance, m-education, development of CSCs, etc. This puts more responsibility on the authorities to use the profits in the right place.

It is yet to be seen how and in what ways the amount will be spent which will determine the post 3G scenario. The incapability of other governments struggling in the post 3G phase is known. The auction itself has seen many failures of the power packed technology. For instance, European operators had to struggle post 3G after it had shelled $100 bn in license fees.

The Indian government for sure can take lessons from its counterparts and can use these funds for better growth of the telecom sector in the next phase. Mahesh Uppal, director, Com First India says, “Currently, the Indian telecom sector has very high government levies of over 30% of operators' revenues. This must be brought to an average international levels of less than 10%.” Post 3G, after spending a huge amount, operators might look for some relief from the government.

Experts also feel that the money taken out from the telecom sector should be invested back into it. A fine blend of vision should definitely entail the revenue gains made by the government in 3G bidding. Rational and disciplined spending of profits being earned can only propel India in sustaining 3G and developing 4G.

It will clearly take at least three years to be on the right side of the profit line after the auctions, till that time better and strategic playing on the part of the government can only ensure going in the right direction.

It will have to subtly stimulate the domestic needs and plan its next move, which will help in the final take-off of the much awaited technology in the country.

Countries worldwide have taken out money from other sectors and invested in the development of technologies. Hopefully, India also uses the money earned from 3G auctions meaningfully, rather than just making a fiscal correction. The next move of the government can only help in the high trajectory growth of the sector.

archanasi@cybermedia.co.in