2G Spectrum

WHAT IS SPECTRUM SCAM?  2G licenses issued to private telecom players at throwaway prices in 2008 CAG: Spectrum scam has cost the government Rs. 1.76 lakh crore CAG: Rules and procedures flouted while issuing licenses 2G Spectrum scam very serious: CAG

The heat on telecom minister A Raja is rising, with the Comptroller and Auditor General holding him personally responsible for the sale of 2G spectrum at dirt cheap rates in 2008, resulting in a loss of up to Rs 1.70 lakh crore to the national exchequer. Calling the 2G Spectrum scam a serious matter, Speaking to TIMES NOW CAG Chief Vinod Rai has said that the report is full and final once its placed before the parliament. He said, "Our report on 2G Spectrum is full and final. After it is placed in the Parliament, it will be shared with you. We had really taken a long time to compile this report as we had to carefully go through every bit on information. The 2G Spectrum case is a scam of a very serious nature." The damning indictment stacks the odds even higher against Raja, who is already under intense scrutiny by the telecom watchdog, civil society and the Supreme Court. In its final report on the alleged scam in 2G spectrum allocation, CAG has said that the minister for IT and communications ignored advice from the PM and ministries of law and finance, and the recommendations of the Telecom Commission to allocate 2G spectrum to a select group of companies at throwaway prices. The CAG has backed up its stinging censure of Raja by attaching files which, it claims, establish the minister's personal culpability. The federal auditor has not spared the Telecom Regulatory Authority of India (TRAI) either, accusing it of standing by as a hapless spectator when its recommendations were either ignored or misused. But it is the minister who may feel most discomfited by the report. A copy of the CAG report was submitted to the PMO on Monday. However, with the Opposition on the offensive, there is speculation that the report may not be tabled till the fag end of the Parliament session. The CAG report could not have come at a worse time for Raja. A few days ago, the Supreme Court expressed its bafflement over his continuing in the government. Sonia Gandhi's twin strikes on Tuesday on the issue of corruption -- against Ashok Chavan and Suresh Kalmadi -- could whet the Opposition's appetite for more scalps from the ruling dispensation. In fact, the Opposition is already demanding that Congress should dump Raja in order to live up to its fresh anti-corruption credentials. As many as 85 licences to 12 companies out of the 122 new licences issued in the controversial January 2008 decision were granted to entities which did not meet the prescribed DoT eligibility conditions, the CAG said. CAG has adopted three different methodologies to assess the loss to the exchequer. One was the offer made by S Tel Ltd, through its communication to the PM and later to the minister in 2007. If it was to be taken, then 6.2 MHz of 2G spectrum for the 122 licences work out to Rs 65,725 crore against the Rs 9,013 crore collected by DoT. The dual technology rate offered by S Tel was Rs 24,591 crore. Thus the total valuation was at Rs 90,316 crore. The second methodology is a comparative pricing based on the 3G spectrum auction. Pointing out that TRAI itself has said that the present day 2G services are offering 2.75G services, and considering scarcity, the auditor has calculated that the 2G spectrum allocated to UAS licensees was worth Rs 111,511 crore against the Rs 9,013 crore that DoT got. For spectrum allotted under dual technology, the value would have been Rs 40,526 crore, as against the meager Rs 3,372 crore that the government got. Thus the total loss to the public exchequer on just these two counts is Rs 139,652 crore. Considering that more than 6.2 MHz of spectrum was allocated, the total loss comes to Rs 176,379 crore. Based on the FDI attracted by companies that have won the licences, the auditor has said that the cost of a pan-India licence could be anywhere between Rs 7,442 crore and Rs 47,918 crore. However, Raja issued a pan-India licence for just Rs 1,658 crore. The CAG has also severely indicted the DoT for the procedure adopted in selecting the telecom providers for allocation of licences, pointing out how Raja manipulated the process to ensure that select companies qualified under the First Come First Served basis. The CAG has pointed out that "given its scarcity value and increasing demand", a comprehensive evaluation of available spectrum was required which was not done. The report said Prime Minister Manmohan Singh wrote to Raja in November 2007 to consider auction of spectrum and revision of entry fee through a transparent manner. Raja replied to PM saying that sufficient 2G spectrum was available to cater to new operators, and increased tele-density would bring down the tariff. The CAG has heavily come down on DoT, saying the "UAS (Unified Access Service) policy and its subsequent amendments" were implemented in a "weak and indeterminate manner" and with reluctance. "The entire process of spectrum allocation was undertaken in an arbitrary manner," The report said the ministry did not make several modifications mid-course based on the "collective wisdom" of the government nor by following TRAI recommendations, resulting in a "transitory phase" of the licensing regime continuing for years together. "UAS licences, along with access to 2G spectrum, were given out in an arbitrary manner in 2008, at a price discovered in 2001, while 3G spectrum, a similar resource, was allocated at market price discovered through auction, generating revenues of Rs 67, 718.95 crore...