UPA celebrating a huge loss to the national exchequer
HAS the government deliberately tried to rig the 2G spectrum auction and make it a flop show? There is serious accusation against the government with its cloak and dagger games played in grounding the spectrum auction. Soon after the expected results of the latest round of spectrum auction Union ministers made a beeline towards the lectern to ‘expose’ the CAG estimation of loss in the first round and also undermine the process set by the Supreme Court. This was a re-auction ordered by the Supreme Court after the latter had quashed the earlier process.
Though it is not known how much the government influenced the bidders to make this spectrum auction a failure only to save its own skin, the lackadaisical attitude to the spectrum auction right from the beginning of the process was in full play. When the Under-Secretary filed an affidavit on why the entire telecom spectrum was not auctioned as sought by the Supreme Court, the court in unconcealed understatement said, “the Under-Secretary has no business to file the affidavit, we have indicated this earlier also”. The judges also in their order said that the casual manner in which the government undertook the process was unfortunate.
Counsel for Idea Cellular and senior advocate Aspi Chenoy told the court that “there was blatant violation of the court’s earlier judgement directing auction of the entire cancelled spectrum”. The government’s role is becoming suspicious because it put up only 295 MHz of the 431 MHz in the 1800 MHz band for the auction. The court had repeatedly asked why the entire cancelled spectrum in the three bandwidths, ie: 800 MHz, 900 MHz and 1,800 Mhz were not put up for auction.
One third of the cancelled spectrum was kept back from auction by the government and there are no ostensible reasons for it. Interestingly, Reserve Bank of India governor D Subbarao, who had written a letter to telecom Secretary D.S. Mathur on November 22, 2007, had sought to know if proper procedure was being followed with regard to the financial due diligence of the process. He had specifically delved into the matter of how the rate of Rs 1,800-cr, determined as far back as 2001 could be applied for licence given in 2007 without any indexation or current valuation.
Union telecom minister Kapil Sibal was not even holding back his fire on why the auctioning failed this time round. He laid the entire blame on the media “sensationalism” and the Comptroller and Auditor General’s (CAG) estimate loss of Rs 1.76-lakh-crore due to the allocation of telecom licences without auctions after 2008. It was quite convenient for the minister to override the fact that the spectrum in the latest round of auctions was truncated.
With quite some ingenuity Kapil Sibal stated that through a judgment of a court the cancellation of licences destroyed sentiment of the market. But close on the heels of the failure came the government’s view on the next round of auction of unsold spectrum by March next year. It would also consider re-pricing of spectrum and strategy for auctioning CDMA spectrum.
Though the government’s stated hope was for garnering Rs 40,000-crore, it had got just Rs 9,407-crore. Also, no CDMA spectrum could be auctioned, as bidders had pulled out. Sibal’s tone and tenor was almost as if the government had succeeded in proving a point by the failure of the spectrum auction: “the Supreme Court has told us to auction. We had no choice on the matter. Now, if the court thinks some other policy prescription is necessary, let the court tell us. The government has no choice. It was a final judgment of the Supreme Court.”
When the minister was asked in a press conference about the deliberate attempt of the government to make the spectrum auction fail so as to prove that its original plan of auctioning was right, Sibal iterated that the government had reached out to entities abroad to attract investments in the sector. He was actually denying allegations by Member of Parliament Rajeev Chandrasekhar that there were no efforts to make the auction successful.
If one gets to see the whole picture even as everyday brings in new facets of the government’s ploy to discredit the CAG, the next round of auction also would be telling on the fiscal deficit. If the idea is to prove the CAG and the media wrong in estimation of the loss and thereby the allegation that there were corruption and sweet heart deals, it is quite unlikely that the next round of auctioning will be any more successful than the last one. Ultimately, the success of the auctioning will depend on how the government takes it seriously.