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Wednesday, November 21, 2012

High Spectrum Reserve Price a Mistake: Montek

Plan panel deputy chief hints at a review of the auction policy after the current round is over


Planning Commission deputy chairman Montek Singh Ahluwalia said on Wednesday that the high reserve price of spectrum in the recent auction was a "mistake" and the second auction later this year will take this into consideration. "I myself had raised the issue that it was a mistake to pitch the reserve price at a level close to that..." Ahluwalia told reporters on the sidelines of Indo-Japan symposium here. "I think, in hindsight, it was clear that the reserve price was too high." Montek is a member of an Empowered Group of Ministers (EGoM) that had set . 14,000 crore as the base price. The spectrum auction fetched a total of . 9,407.64 crore in the auction that lasted barely two days and found no bidders for the big circles, like Delhi and Mumbai. "But that doesn't matter; we are going to re-auction and you will discover the price," he said. The EGoM had lowered the reserve price from . 18,000 crore suggested by sector regulator Trai to . 14,000 crore, a decision that had been criticised. 
"I want to mention here that one or two newspapers criticised that as if by lowering the reserve price we are going to reduce the outcome. I had argued very strongly that a healthy auction process will discover the prices whether you fix it at one or two or seven hundred," he said. He hinted at a review of the auction policy after the current round of auction is over. "…once the auction is done, the issue of refarming can be looked at afresh...we should get the auction over and done and then what future policy should be, should be thought out much more clearly," he said.


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