Spectrum auctions: Need rethink on use of natural resources for revenue raising, Rajiv Kumar

Plenty of resources’ to fund National Health Protection Scheme: Niti Aayog Vice-Chairman Rajiv Kumar.

By: ENS Economic Bureau | New Delhi | Published: February 15, 2018 2:45:54 am
Spectrum auctions: Need rethink on use of natural resources for revenue raising, Rajiv Kumar Kumar said that the issue was being discussed as part of drafting the National Telecom Policy, 2018.

In an indication of change in the government’s stance towards spectrum auctions, Niti Aayog Vice-Chairman Rajiv Kumar Wednesday said that the Centre was rethinking about how to balance the objectives of using natural resources for revenue raising as well as economic development. Kumar said that the issue was being discussed as part of drafting the National Telecom Policy, 2018.

“We have not done the famous spectrum sales (recently) and there is a rethinking in the government, I think, about how to use natural resources for revenue raising and for economic development. I think there will be a new telecom policy I believe is on the anvil …This is a beginning of a process whereby you don’t try and always maximise government revenues through natural resources. Instead, you may want to maximise the development by bringing in greater benefits, if you like, to citizens or to the private sector, who are the users of these natural resources,” he said. Kumar was speaking at a conference on post-Budget economic scenario, organised jointly by the Institute of Economic Growth and the Confederation of Indian Industry.

In its recommendations for the new telecom policy sent to the Department of Telecommunications (DoT) earlier this month, the Telecom Regulatory Authority of India said that the Centre should formulate strategies to review the spectrum management exercise in a way that ensures maximum socioeconomic gains to the country.

In the aftermath of the allegations being unearthed over irregularities in allocation of 2G spectrum, the Centre’s stance shifted from providing the natural resource to operators through a first-come-first-serve basis to auctioning the airwaves. The government’s pursuit of higher revenues through auctions, which is seen to be a direct result of the CAG’s observations on the loss of revenue through administrative allocation, has also resulted in spectrum becoming costlier and the consequent debt situation, the roots of which pre-date the current non-performing asset scenario shadowing the country’s financial services sector today.

Last year, the Reserve Bank of India red-flagged the telecom industry and asked banks to review their exposure to the sector. An inter-ministerial group was formed, headed by DoT Secretary Aruna Sundararajan, to suggest measures for reducing financial stress in the sector. Analysts have, for long, pointed out that the Centre’s spectrum management strategy should focus on the roll out of telecom services and not simply maximisation of its revenues through auctions. “If instead, for example, the government seeks bids of how much revenues companies would share with it, there would have been less harm to service growth or consumers,” a Delhi-based telecom expert said.

On the National Health Protection Scheme (NHPS) announced by the government in the Budget, Kumar said “there were plenty of resources” to fund the scheme but the challenge is its effective implementation. The scheme is expected to cost around Rs 12,000 crore annually for 10 crore families. He called for setting up a full capacity regulatory body in healthcare sector for helping in implementation of this scheme. This body would work as a facilitator between the various government agencies and private providers to ensure an effective delivery mechanism with efficient outcomes. In the Union Budget 2018-19, an initial corpus of Rs 2,000 crore was provided for the NHPS that aims to provide medical cover of Rs 5 lakh to over 10 crore poor and vulnerable families.

Kumar said the Budget has focussed on building the agriculture sector, with the focus moving away from raising production towards increasing farmers’ incomes. He said the Budget was not “populist” since the expenditure to GDP ratio has declined. Even though the capital expenditure to GDP ratio has fallen, the Budget should help kick-start investments since a lot of spending on infrastructure projects such as Bharatmala project is being done “off-budget”.

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