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Use Spectrum Funds for Infrastructure Growth

The success of the latest auction of 2G spectrum proves the hollowness of the UPA government’s claim, articulated by Union minister Kapil Sibal, that the previous auction had caused zero loss. The auction, which began a week ago, would not have happened if the Supreme Court had not quashed the previous auction, tainted by favouritism and corruption. In short, the huge amount—over Rs
56,000 crore—the auction has so far generated would not have accrued to the government if the court had accepted its version. During the last five years, the government has been able to raise Rs 78,000 crore from disinvestments alone. A total of Rs 1.5 trillion has been raised from telecom auctions so far.
Together these amounts constitute a huge sum which could have been used to significantly change the face of India. Just imagine how many schools, hospitals, roads, dams, drainages and irrigation systems could have been built with this money. Alas, the money was used to bridge the revenue gap in the national budget. In other words, the extra money generated was used to support the government’s squandermania, as reflected in its policies of profligacy. It is like selling the family silver to finance a profligate lifestyle. The government has nothing to show as having been built with the money raised through disinvestment and auction of telecom bandwidths.
The government should take a policy decision that money raised through asset sales would never be used to bridge the annual fiscal gap. Instead, it should be used to build new capital assets that will boost economic growth. For instance, good roads and better supply of electricity alone can make a significant improvement in employment generation. American investor Warren Buffett had once suggested that the US should pass a law under which all sitting Congress members became ineligible to contest again if the fiscal deficit crossed 3 per cent of the GDP. Such a law may not be possible but it is time the idea of a national investment fund is revived so that one-time windfalls are used more productively.

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