IT was not unexpected that the the failure of the 2G auction would bring cheers to the UPA government and the Congress. Both pounced at the opportunity to claim that the Comptroller & Auditor General’s (CAG) report on 2G spectrum was “wrong” and the government stand was vindicated.
A Congress leader, known for shooting off his mouth and commenting without bothering to check facts said that the the “CAG should re-check his figures of national loss.” Telecom Minister Kapil Sibal was more guarded. The Information & Broadcasting Minister Manish Tewari asked: “Mr CAG, where is the loss of 1.76 lakh crores.”
The government, which ought to have been concerned over the failure of the auction, sounded jubilant. What these leaders overlooked in their glee was that discretionary allocations are fraught with the risks of corruption and/or violation of the equality principle. According to a newsreport, “ In the 2G case, the Finance Ministry had raised the question of competitive bidding at one stage. The CAG took his cue from this. Later, the Chawla Committee on the allocation of natural resources said something similar in general terms.”
The Supreme Court also moved in to slam the government. Taking strong exception to the Union government’s “casual” approach in opening bids for the 2G spectrum licenses, the Supreme Court has chided it for delegating a subordinate rank officer to file affidavits on its behalf.
After hearing in the spectrum licenses scandal – estimated at Rs 1.76 crore by CAG the SC rejected the affidavit and sought the telecom secretary’s response regarding the fresh bidding for 122 licenses which were cancelled by the court early this year. The recent auction accrued merely Rs 9,407.64 crore against the target of Rs 40,000 crore.
The SC sought an explanation on why all the licenses were not put up for bidding. The court said it would hear the Centre’s stand next week but added: “withholding of even 0.1% spectrum from being auctioned would not be acceptable”.
The court said it was not informed that the auction was only for 800 of the 1800 MHz band. It asked for attorney general Goolam E Vahanvati’s opinion about charge-sheeted companies and individuals who were earlier allotted excess spectrum under the Prevention of Corruption Act.
According to a section of the media, “ faced with an arbitrary or discretionary or opaque executive decision, the question arises: if proper procedures had been followed to ensure equal opportunity to all interested parties (which generally would mean competitive bidding in some form), would the government have realised more revenue, and/or would windfall gains to some arbitrarily selected parties have been avoided? These are entirely legitimate audit questions. “
It is also clear that the recent failure of the auction does not invalidate calculations in the audit report. Experts have claimed that “ market conditions in 2012 are different from those prevailing in 2007-8.”
The question being asked is that “ if the market conditions were bad in 2007 as they appear to be now in 2012, who would have paid bribes to acquire 2G spectrum, and why would the Central Bureau of Investigation be investigating corruption cases?”
Deputy chairman Planning Commission, Montek Singh Ahluwalia has come on record saying that spectrum was over-priced for the auction and that there was a need to have a relook at spectrum prices.” Before this the finance minister P Chidambaram had said that the spectrum EGoM is going to meet soon and is going to relook at the reserve price for four circles, which did not see any bidding.
Three major areas-Rajasthan, Karnataka, Delhi, and Mumbai-did not see any bidders, with telcos blaming the “high reserve price” for the lack of participation. However, Chidambaram had refused to answer the question on whether this reserve price would be lowered or not. He said that he would have to relook at it at the time of the EGoM meeting. But today, with the statement that Ahluwalia made, a key member of the EGoM, one can guess that reserve prices could be lowered and fresh auctions are going to be conducted.
“A healthy auction process will discover the price whether you fix it at one, or two, or 700. So, I think in hindsight it is clear that the reserve price was too high. But that doesn’t matter. We are going to re-auction and you will discover a price,” Ahluwalia told reporters.
All eyes are going to be on the Supreme Court’s hearing next week in the matter. The Supreme Court has said that it is not fully satisfied with the manner in which the government has implemented its order and sought an affidavit from the government in this regard.