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Indian Communications Minister - auction 3G now!

As soon as he was sworn into his new post as India's Communications and IT Minister, Andimuthu Raja declared that the country's auctions for 3G licences would be allocated a date as a matter of urgency. A date before the end of 2009 was, however, favoured.

Mr Raja was not able to provide a definitive timeline for the procedure because there is still some disagreement between his own ministry and the Indian Ministry of Finance. This centres on the starting prices for the auction. The Finance Ministry understandably prefers a higher floor price as it believes that this will raise more revenue.

Quite how much the Indian government expects to raise through the sale is certainly in dispute. Mr Raja's ministry had anticipated that the auction would raise between US$6.4 billion and US$8.5 billion, but this February the Finance Ministry estimated that little more than half could be raised.

In addition to this financial area of disagreement, the recent federal election campaign also put matters on the back-burner. One positive result of the election is that Andimuthu Raja, who was the serving Minister of Communications and IT before the election, no longer has to deal with the influence of Communist Members of Parliament, who held the balance of power and who were much less likely to support reforms oriented towards the private sector.

In fact, one spectrum block in each service area was earmarked for   two government-controlled telcos, Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL). The government maintained that these companies would always have to pay a spectrum licence fee.

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