UNSOLVED MYSTERY: 2 G

The birth of anti-corruption movement has brought to the limelight some of the most ruinous scams which have hard-hit the Indian economy. Every day we are served with a hot and sensational story of a new scam with our morning coffee. So much so that they have become the walk and talk of our daily life. One such scam which found its place at the second spot according to the Times Magazine, among the Top Ten Abuses of Power is the 2G Spectrum Scam. It has been accounted to cause a loss of Rs. 1.76 lakh crore to the public exchequer in order to favour a few companies. The root of the scam lies in the basis of distribution of 2G spectrum in 2008. The two ends of this tug of war are the Department of telecommunication on one side and Comptroller and Auditor General on the other. With the recent auctioning process resulting in a flop show and questions being raised on the famous controversial figure of Rs. 1.76 lakh crore, the need to justify the CAG accusations has risen. The government has launched an outright attack on the CAG demanding explanation and reason for the collection of mere Rs. 9407 cr in the recently held 2G auctioning process, as against the fancy figure proposed by CAG. On the other end, Mr, Vinod Rai, comptroller and auditor general is pulling a mime act. Amidst all this hue and cry the number 1.76 lakh cr has gained sudden importance and this how it was decided upon. According to the report by CAG on 2G scam they have clearly specified that the expected revenue, if there had been an auction in 2008 can only be calculated at a presumptive level. The reason being the value of an auction depends on several factors like demand, supply, market conditions, returns, competitors, business plan envisaged etc. which can be accounted for only under present conditions and not for a past event. But since CAG had the responsibility of unveiling the real picture behind the whole scam, they had to device ways for calculating the loss and so they did. The findings were based on two aspects- the proposal of S Tel (a company favoured by A Raja) and the rate of 3G auction. Source one was S Tel limited, who had applied for UAS (unified access services) licence in September 2007. It had voluntarily communicated to the then Hoable Prime Minister and had also made an offer to pay a surplus share of Rs. 6000 cr to the DoT for a pan India licence over and above the spectrum charge/ revenue share payable as per the prevailing policy. In their subsequent communication with the Hon'ble MoC&IT dated 27 December 2007 they pegged there new offer at 13,752 crore over a period of 10 years for allotment of 6.2MHz GSM spectrum. They also promised to confidently face counter bids and enter healthy negotiations. The consequent loss as a result of FCFS (First Come First Serve Basis) is:

Category of No. of licence licence

Offer Price of S Tel for a Pan India License

Discounted price of S Tel for a Pan India License

Value as Amount per Actually discounted received price of S Tel

Potential Loss to the exchequer

New UAS 122 Licences Dual 35 Technology Total

13752 13752

8825 8825

47964 17945 65909

9014 3372 12386

38950 14573 53523

Let us study the second source as well before deriving a conclusive loss figure. The second source was the recommendation of TRAI (Telecom Regulatory Authority of India) for the sale of 3G spectrum in a report addressed to the Government in September 2006. In this report they had suggested the rate of 3G spectrum at Rs. 1010 crore per block of 2*5 MHz and further revised it to Rs. 3500 crore by the EGoM constituted to consider the issues relating to auction of 3G spectrum. When the question popped up for determining the probable cost of 2G spectrum in an auction it was observed that services offered by 2G were in actual terms offering 2.75G services. Hence it could be compared with the suggested 3G system. So the calculations began and the result was as such: (in Rs. Crore) Category of licence New UAS Licences Dual Technology Total No. of licence 122 35 3G rate for Pan India licence 16750 16750 Value of 2G as per 3G rate 111512 40526 152038 Amount actually received 9014 3372 12386 Potential loss to exchequer 102498 37154 139652

These revelations were the reason behind the birth of this scam. While comparing the two sources described above it was found that the calculations using 3g prices were more accurate and logical. Therefore, after adding an additional amount of Rs. 36993 crores for the quantity beyond contracted 6.2 MHz, the grand total of Rs 176645 crores loss was reached. The report had done its part but nothing dies so simple. This was just the start of a long battle which hasnt settled till date. Even though the DoT tried to explain its stand by proposing that the process was aimed at making cheap telecom services available to the masses for their development, they couldnt patchwork all their flaws. This was essentially because CAG had emphasised on the fact that the huge loss figure was just an aspect of the scam and the other glitches like non adherence to norms, faulty procedures, non-competent companies (who even failed to satisfy the basic criteria for being eligible as a potential buyer for 2G spectrum) and illegal practices were the more important issues to be taken care of. This is the only point that CAG is managing to stand with amidst the storm of questions being asked, after the failure of the recently held auction.

The verdict is still far from being arrived at as the issue is yet unresolved. Blames and counter blames are filling the newspapers and increasing the revenues for the news channels but nothing more than a one day gossip is achieved.