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May 22, 2010

Impact of the 3G Auction on Indian Economy

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By P. Neelakantha Achary

It well and good to hear about the 3G Auction and the government of India will get Rs 70,000 cr as a result. This is another big step in the telecom sector of India and very good news for the shareholders of major telecom companies. The 3G auction would also be very useful in all the arenas. But the big question, what will be the impact of this 3G auction on Indian economy. Experts and bankers believer that this auction may lead to cash crunch.

The mobile users will get the best service after the 3G services are being offered by various companies those won the bid process. The major concern of the bankers and experts believe that this auction would lead to cash crunch in the economy. As the companies will be paying the amount for the 3G services and this will have direct impact on the fund the companies have been saving with banks. Banks need to dole out money to companies to meet their huge requirement for the 3G process.

If at all any the situation of cash crunch arises out of the 3G auction, then it's again the duty of the government to protect the interest of the companies, banks and industrialists in the economy. However, the 3G auction is a development step and telecom world is cheering up.


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