3G auction fund to help tackle fiscal deficit: Govt

The government on Monday said it is in a better position to handle its finances with the auction of 3G spectrum yielding almost double the revenue at Rs 67,719 crore (Rs 677.19 billion) against the projected Rs 35,000 crore (Rs 350 billion) in the Budget.

"It immediately gives us addition in terms of non-tax revenue ... the fiscal situation is far more encouraging," Finance Secretary Ashok Chawla told reporters after the high level co-ordination committee on financial markets meeting at the Reserve Bank office.

Earlier, Finance Minister Pranab Mukherjee had said additional money from 3G spectrum auction will provide him a little elbow room to manage the government finances.

Besides, the government expects more revenue from the forthcoming auction of broadband wireless access which would give it some additional headroom, Chawla said.

The government has projected a fiscal deficit of 5.5 per cent for 2010-11 against an estimated 6.7 per cent in the previous year.

The additional revenue from 3G spectrum auction alone would enable the Centre to cut its fiscal deficit from estimated 5.5 per cent of GDP to little over 5 per cent during 2010-11.

Chawla said he did not visualise any liquidity crunch in the system in the immediate future due to 3G auction and advance tax outgo.

The first quarterly installment of advance tax will have to be paid by June 15.

"Our expectation is that this will not cause any liquidity crunch," he said.

The committee primarily discussed the development of the corporate bond market, he said.

The meeting was attended by Sebi chairman C B Bhave, RBI governor D Subbarao, IRDA chairman J Hari Narayan and financial services secretary R Gopalan, among others.