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Can India's spectrum auction help cap its budget blowout?

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Danish Siddiqui/Reuters/File

(Read caption) A man checks his mobile phone as he walks past a shop displaying the Vodafone logo on its shutter in Mumbai, India, January 15, 2014.

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The Indian government’s wireless spectrum auction this week has been good news for a telecom sector that was until recently shadowed by a corruption scandal – and a boon for the government’s bottom line.

The government has already raised about $8 billion in the multiday auction, which started Monday and is still going. The money should help contain the country’s budget deficit, which is currently around 5 percent of GDP, or roughly $90 billion. “It does help the government – they are getting a fair bit of cash from this,” notes our correspondent on the ground in Mumbai. “What’s worth noting is that it’s pretty competitive.” Indeed, the hotly contested auction is a major turnabout from the government’s last auction, which saw only one company participate. With base prices lower this time around, the auction has drawn big players like Reliance Jio, Vodafone, and Bharti Airtel. It’s part of a broader government effort to revive investment in the sector. India’s telecom market is the second-largest in the world, but ... For the rest of the story, continue reading at our new business publication Monitor Frontier Markets.

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