Spectrum auction: Here's all you need to know

A cash-strapped Centre begins the much-awaited auction of telecom spectrum on March 1. it expects to raise a minimum of Rs 3.92 lakh crore if all the seven bands are successfully sold.

The amount is significant since it works out as 11.36% of the total government spending (revised estimate) of Rs 34.50 lakh crore in 2020-21.

Against this backdrop it is interesting to see how much money has the Centre raised so far down the years from auction of telecommunication spectrum.

The auction of telecom spectrum in India began from 2010 when spectrum in the 2,100 MHz and 2,300 MHz bands were put to online auction.

So far, the government has collected Rs 3.56 lakh crore from the six auctions it has held since 2010. It means that the Centre is targeting to raise an amount that is about 1.1 times the total amount it has raised from the six rounds.

The amount raised by the Centre so far is as follows:

Rs 106,262 crore in May 2010

Rs 9,407 crore in November 2012

Rs 3,640 crore in March 2013

Rs 61,163 crore in February 2014

Rs 109,875 crore in February 2015

Rs 65,789 crore in October 2016

A section of the experts believe that though the current auction is being held five years after the last round, the response might be muted since the companies might tend to conserve funds for the 5G spectrum action that might take place later this year.

Though the government has not specified how they want to utilise the proceeds of the auction of spectrum, a look at the budget figures makes it evident that the government has a plethora of areas on which it can spend the funds. In 2021-22 Union finance minister Nirmala Sitharaman proposed an expenditure of Rs 5.54 lakh crore that is 34.5% more than the budget proposal of 2020-21.

Besides this amount, the minister also said they would provide more than Rs 2 lakh crore to states and autonomous bodies for their capital expenditure, the focus of the thrust being asset creation and generation of jobs while the economy is struggling to emerge out of the pandemic.

If the auction target is met, it alone might bring Sitharaman almost 71% of the increased capital expenditure that she has targeted for the next financial year. The auction target, if met, can also provide funds to Sitharaman to meet the combined expenditure of Rs 3.17 lakh crore in the two crucial sectors of healthcare and education.

While the allocation in healthcare is Rs 223,846 crore – up from Rs 94,452 crore in 2020-21 – that in education is Rs 93,223 crore in the next financial year.

Incidentally, spectrum refers to a range of radio waves that are used for communication process. All types of communication process – radio broadcasts, wifi, bluetooth, smartphones – require radio waves. The numbers 2G, 3G, 4G and 5G represent the generation of technology employed for communication. The higher the frequency, the more the data that can be packed in the same amount of time.

A section of analysts also believe that the current auction is significant since some analysts believe that the interest and proceeds of the auction might influence the reserve price of the 5G waves that are supposed to be put to auction later this year.