Its gleeful instant reaction to the flop 2G auction is just not on. The government reaction has surprised almost everyone, except those Congress satraps. To many, the flop 2G spectrum auction may eventually snowball into another major political controversy, even bigger than the Radia tape, original 2G and other telecom scams put together. It has the potential to put the government into much bigger embarrassment than what, if at all, it caused to CAG. The industry no-show in the auction from a number of important high-volume circles such as Delhi and Maharashtra puts finger at a fresh government-industry collusion to berate the office of CAG.

Instead of mourning the loss of Rs. 40,000-crore projected revenue income to the exchequer out of the auction, Congress party bigwigs seem to be more excited about the loss of CAG's face on account of its 'faulty' calculation and going gaga about it. There ought to be something grotesque about the party’s celebration of its crowning flop show of spectrum auction. Few will blame the critics of the party and its spokespersons, who wasted no time to blame CAG for its “wrong” calculation of the loss to the exchequer for not taking the auction route to distribute 2G airwaves among telecom service providers, if they feel that the flop show might have actually been meticulously engineered by the concerned players.

The immediate concern is the impact of the massive loss of the projected revenue from the spectrum auction sale on the government’s fiscal deficit, which has been recently revised downward to 5.3 per cent of GDP on the basis of the targeted income from the airwaves resale and cost saving measures in a number of areas. The flop 2G auction has served a big jolt to the revised fiscal targets. But, the Congress party appeared to be least bothered about the aspect. The government is yet to explain how it plans to tackle the unexpected revenue loss. Instead, the entire government is out to slam CAG with loud ‘I-told-you-so’ rhetoric. Leading the attack on CAG are no less than Union Finance Minister P Chidambaram, accompanying Telecom Minister Kapil Sibal and Information and Broadcasting Minister Manish Tiwari. “Where are those Rs. 1.76 lakh crore,” thundered Sibal. Tiwari put it rather more bluntly and disdainfully: “Mr. CAG, where is the Rs. 1.76 lakh crore? I think it is time for some serious introspection.”

In fact, it may be time for introspection by all – Congress cheerleaders as well as the defensive Opposition – and revisit the CAG report and also investigate what made those top telecom service providers suddenly disinterested in 2G spectrum. First of all, India’s Comptroller and Auditor General, Vinod Rai, never suggested CAG’s initial loss estimate of Rs. 1.76 lakh crore due to arbitrary spectrum allocation in preference to open auction was final. In fact, CAG applied four different scientific parameters of calculation under different situations to arrive at potential losses to the exchequer under each category. It produced four different potential losses – Rs 1.76 lakh crore, Rs 69,626 crore, Rs 67,364 crore, Rs 69,626 crore and Rs 57,666 crore. Basically, there were three components – the loss on 122 new licences issued by Raja; the loss on undercharging for dual-technology licences; and the loss for allotment of spectrum beyond 6.2 Mhz.

What about the recommendations of the Telecom Regulatory Authority (TRAI)? TRAI had pegged the reserve price at R. 18,000 crore for 5 Mhz spectrum. The government auction followed the TRAI recommendation, which was, on the face of it, reasonable and the government had expected that the new measure would yield at least Rs. 40,000 crore in fresh licence sale proceeds. It must investigate why the auction sale generated only Rs. 9,400 crore with no takers from several key circles, including Delhi, the seat of the national government with massive cell-phone market penetration, Mumbai, the country’s most influential financial and business hub, Karnataka, and the fast growing market of Rajasthan.

The onus on the 2G auction failure lay entirely on the government. It does not certainly justify the arbitrary allotment of spectrums by disgraced former Telecom Minister A Raja, which was subsequently rejected by the Supreme Court. The government itself did not support Raja. The CAG report clearly mentioned this aspect where it said: “the entire process of allocation of UAS (unified access service) licences lacked transparency and was undertaken in an arbitrary, unfair and inequitable manner. The Hon’ble Prime Minister had stressed on the need for a fair and transparent allocation of spectrum, and the Ministry of Finance had sought for the decision regarding spectrum pricing to be considered by an EGoM. Brushing aside their concerns and advices, the Department of Telecommunications, in 2008, proceeded to issue 122 new licences for 2G spectrum at 2001 prices, by flouting every canon of financial propriety, rules and procedures.”

Further, the report said “the DoT did not follow its own guidelines on eligibility conditions, arbitrarily changed the cutoff date for receipt of applications post facto and altered the conditions of the FCFS (first-come-first-served) procedure at crucial junctures without valid and cogent reasons, which gave unfair advantage to certain companies over others.”

The Congress spokespersons, who have been continuously spewing venom on the CAG report and others ascribing ‘intentions’ behind it, conveniently forgot the concluding part of the document that clearly said: “The fact that there has been loss to the national exchequer in the allocation of 2G spectrum cannot be denied. However, the amount of loss could be debated.” The current political crucifixion of CAG, a constitutional authority, in the wake of the 2G auction’s mystery flop by responsible Congress leaders is in poor taste and unwarranted. The flopped auction does not justify the brazen anti-CAG reaction. (IPA Service)