Airwave Auction May Help Biggest Deficit Cut in 19 Years, Mukherjee Says
Finance Minister Pranab Mukherjee said India’s auction of wireless airwaves may pay for its biggest budget-deficit reduction in 19 years, as the government expects to earn at least 600 billion rupees ($13.3 billion) from the sale.
Earnings from the auction may be “over and above” the budget estimates for the current year, Mukherjee, 74, said in an interview in New Delhi yesterday. “I do hope it will give me some elbow room” to cut the budget deficit.
Operators including Vodafone Group Plc and Bharti Airtel Ltd. may pay 250 billion rupees more than the government earlier estimated for the right to provide high-speed mobile services, according to telecommunication ministry projections. Higher revenue will help Mukherjee slash the budget shortfall to 5.5 percent of gross domestic product in the current financial year ending March 31 from 6.9 percent of GDP in the previous year, the sharpest cut since March 1992.
The finance minister is also expecting a boost in tax collections, helped by faster economic growth. India’s $1.2 trillion economy may expand 8.5 percent in the current fiscal year, said Mukherjee, who served as the foreign and defense minister in Prime Minister Manmohan Singh’s cabinet before being appointed as the finance minister.
“I am quite confident that we’ll come back to our trend growth rate of 9 percent to 10 percent,” Mukherjee said. “My worry is that I must sustain it over a period of next ten years.”
Mukherjee had in February budgeted for 350 billion rupees from the sale of frequency licenses in the year to March 31. The auction may raise 600 billion rupees, the telecommunications ministry said yesterday.
Prime Minister Manmohan Singh wants the economy to grow at over 10 percent each year to generate jobs and improve the lives of 828 million Indians that the World Bank estimates live on less than $2 a day.
Mukherjee, who in 2008 successfully rallied China, Japan, Russia and 42 other nations to end India’s nuclear isolation and resume supplies without signing the Nuclear Non-Proliferation Treaty, said India’s growth prospects will make the country an “important” destination for foreign investments.
He said India would “carefully” monitor the capital inflows, which could strengthen the currency and hurt the nation’s exports.
“We are watchful and appropriate action will be taken to ensure that there is no rude shock,” he said.