Amid debate over whether spectrum should be auctioned or not, Telecom Minister Kapil Sibal today said that the sector should not be viewed as a source of revenue for the finance ministry as high cost of radio waves may prohibit the telcos from providing low tariffs.

"The telecom sector should not be viewed as a source of revenue, especially in the context of the debate taking place today. Everybody is looking at the telecom sector as a source for earning money for the finance ministry," Sibal told reporters on the sidelines of India Telecom 2010.

Government policies of allotting 2G spectrum bundled with the licences and not auctioning has created a big controversy, with the government auditor alleging that non-auctioning of scarce spectrum may have caused a revenue loss of up to Rs 1.76 lakh crore to the exchequer.

The government had distributed 122 licences in 2008 during former Telecom Minister A Raja's regime at Rs 1,651 crore for pan-India operations. Raja resigned in the wake of row over 2G spectrum allocation scam.

He added that we must also ensure that the industry had enough money to invest in the sector. If price of spectrum is high then "you will reach a situation where you will not be able to provide low tariffs."

Broadband and telecom should be looked upon as a vehicle of empowerment rather than a sector from which we can squeeze money to achieve our fiscal growth, he added.

On auction of spectrum, Sibal said, "If you look at telecom sector across the world, not every country has gone through an auction process... At some point in time, we may not go through the auction process while at others we may. It all depends on where the country is placed."

Sibal also talked about a differential pricing policy regime where the operators may be asked to charge operators in the urban areas and offer services in the remote rural areas for free.

Sibal also said that there should be focus on the hardware and telecom equipment sector.

"COAI fully endorses and supports the vision of the Minister of Communication Kapil Sibal and has always advocated that the telecom industry is a powerful engine for the socio-economic development of the country," Cellular Operators Association of India Director General Rajan S Mathews said.

"Therefore, it is imperative that the National Telecom Policy should aim to nurture the industry to ensure that the national development goals are achieved and the industry is not seen as a cash cow to raise revenues and close the government budget gaps," he added.