Divestment, 3G may net Rs 75,000 cr

An aggressive disinvestment agenda and the auction of spectrum for third-generation mobile telephony allowed the government to project non-tax revenue of Rs 148,118 crore (Rs 1481.18 billion) in 2010-11, an increase of Rs 35, 927 crore (Rs 359.27 billion) or over 30 per cent from the revised estimate of Rs 112,191 crore (Rs 1121.91 billion) in 2009-10.

This buoyancy would help it reduce the fiscal deficit to 5.5 per cent of the gross domestic product in the coming year.

In 2010-11, the government has targeted revenue of Rs 40,000 crore (Rs 400 billion) from divestment of its stake in public sector undertakings (PSUs).

These proceeds are estimated at Rs 25,000 crore (Rs 250 billion) in 2009-10; so far, it has raised Rs 12,660 crore and the remaining amount would come from the follow-on issue of NMDC, which values the company at 400 per share.

So, the target for 2010-11 is 60 per cent higher. "The government has high hopes from disinvestment," said Satya Poddar of Ernst and Young.

The government diluted a part of its equity stakes in NHPC, NTPC, NMDC and Rural Electrification Corporation in 2009-10. The Budget papers did not name the PSUs in which the government would divest its stake in 2010-11.

Some companies that could come to the market are SJVN, Engineers India, Steel Authority of India and Coal India. Only, the recent lacklustre performance of the NTPC and REC issues has put a question mark on the appetite of investors for public sector paper.

The government hopes to get at least Rs 35,000 crore (Rs 350 billion) from the auction of 3G spectrum. It had budgeted a similar amount in 2009-10 but could not complete this in time.

As a result, its revenue from communication services was Rs 13,795 crore (Rs 137.95 billion) in 2009-10, from the initial estimate of Rs 48,335 crore. In 2010-11, this has been raised to Rs 49,800 crore (Rs 498 billion).

The 3G auction process is slated to start on April 9. The Department of Telecommunications released the notice inviting applications for the auction this week. The last date for applying is March 19, and the mock auction will take place on April 5 and 6.

In West Bengal, Punjab, Himachal Pradesh, Jammu & Kashmir and Bihar circles, four slots will be auctioned; in the other 17 circles, only three slots would be auctioned. In the earlier draft NIA, only three slots were offered for bidding across the country.

State-run telecom majors MTNL and BSNL had already been given 3G spectrum to start services. The spectrum would be available commercially to all the successful bidders from September 1.

The government has set the base price for 3G spectrum in metros and Class-A cities at Rs 320 crore (Rs 3.2 billion) and for Class-B cities at Rs 120 crore (Rs 1.2 billion), while for Class-C cities it is Rs 30 crore (Rs 300 million).

The pan-India reserve price for 3G is Rs 3,500 crore (Rs 35 billion). The 3G auction, scheduled to start from January 14 this year, was delayed several times amidst differences between DoT and the defence ministry.

The new schedule misses the deadline fixed by the finance minister to complete the process before March 31.