By S Gurumurthy
26th November 2012 08:49 AM
Sonia Gandhi never opened her mouth on the 2G scam when the 2G scam broke out in 2009; or, when the CBI raided the DoT in October 2009; or, when the CAG report indicted the government in November 2010 for causing loss as between Rs 58,000cr and 1.76 lakh cr; or, when A Raja, the Telecom Minister resigned a couple of days later; or, when the UPA Government’s one man inquiry by Justice Shivraj Patil indicted him in January 2011;or, when Raja was raided by the CBI in January/February 2011; or, when he was arrested in February 2011; or, when the Supreme Court began chasing the government to act against the looters in 2G scam; or, when the CBI said in its chargesheet in April 2011 that the loss was Rs 31,000 crore; or, when the Supreme Court cancelled the 2G licenses in February 2012; or, when the former Cabinet Secretary K M Chandrasekhar told the JPC in October 2012 that he had recommended to the PM to charge Rs 35,000cr instead of Rs 1,658cr charged.
She has opened her mouth only now when R P Singh, former Director General of Audit [CAG], obviously lied to the nation that he was made to sign the CAG report. R P Singh is now Sonia’s new Gospel.
R P Singh, who had signed the CAG report on 2G scam on 8.11.2011, began prevaricating that he did not want the loss figures included in the report.
He shamelessly says that he was made to sign the report. Most media reports have ripped apart his lies. He has not only signed the audit report, he had also sent a forwarding letter to the report saying “If 2G rates are to be pegged to the rates discovered through auction for 3G spectrum, the impact would be Rs 1.02 lakh crore. “ Does it not mean that he fixes the loss as Rs 1.02 lakh cr. The difference between the high-end figure of Rs 1.76 lakh cr and Rs 1.02 lakh cr is because he did not account for dual technology and extra spectrum that was included in the total loss of Rs 1.76 lakh cr. Now, the man says that the loss is only Rs 2,645 cr. Why did he not mention it in the covering letter in 2011? The man is lying is self-evident. The proof will come when he gets the reward for his lie. R P Singh’s success is in making Sonia talk on 2G.
Sonia Gandhi had long back declared zero tolerance to corruption.Obviously she does not seem to tolerate the zeros in the figure of 1,76,000 and would like them knocked out. She hints at the zeroes being added by the CAG at the instance of Public Accounts Committee headed by M M Joshi.
Kapil Sibal claimed once that there was zero loss in 2G licences. But,he did not dare repeat it a second time. Even P Chidambaram, who almost did a Sibal on Coalgate, didn’t support Sibal in 2G. No one questions the fact of the loss, even though the extent of loss is debatable. Even the CAG report, bearing R P Singh’s signature says: “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.” On the extent of the loss arising by selling the spectrum at 2001 rates, the CAG report had put the loss at between a low of Rs 57,566cr and a high of Rs 1,76,645cr.
The CAG’s range consists of the following four indicators: One, Rs 57,566cr on the basis of the offer made by S Tel for open bid for the spectrum; two, Rs 1,76,645cr on the basis of open bids for 3G licenses; three, on the basis of the sale of shares by two of the licensees, Unitech [Rs 69,626cr] and Swan [Rs 57,566cr]. The Swan-sale based loss figure is the lowest and the 3G auction based figure is the highest. Even Sonia’s fans cannot argue that the loss to government could be less than the profit accrued to Swan and Unitech which just resold the 2G licenses allotted by the UPA Government. The media and the Opposition picked up and highlighted the upper end of Rs 1.76 lakh cr. If the yardstick of former Cabinet Secretary K M Chandrasekhar is accepted, the loss figure would be as high as Rs 4lakh crore, as the draft report of CAG had mentioned. So even the original figure of CAG in the draft report was not without basis. It was founded on the Cabinet Secretary’s view.
The debate on the amount of loss has restarted because, in the auction of 2G spectrum in November 2012, most telecom companies which bought spectrum at throw away prices in 2008 refrained from bidding. There was virtual stampede for spectrum with 575 applicants for 122 licenses in 2008. But only five players have bid in 2012. Reason? Against the throw away price of `1,658cr charged for 22 circles in 2008, the government demanded a high minimum base price of `14,000. The telcos could have paid this price in 2008 but not in 2012. Because the market conditions have changed. See what a global telecom player says on why there is not so much demand for spectrum now as compared to 2008. Marten Pieters, Managing Director and CEO, Vodafone, who has welcomed and participated in the auction of 2G spectrum now, says, “The value of spectrum depends on a lot of factors. Three years ago, when 3G spectrum was auctioned, the Indian economy was booming. But now the economy is not performing so well. And in the last few months, the number of our customers has reduced to just over 900 million from around 930 million.” This answers those who question the CAG’s numbers.
Spectrum commanded much higher value in 2008 than now. So what the government should have done in 2008, namely fix a high minimum price, it has done now. The debate is about what was the spectrum value then, not what is its value today. That the value of spectrum then and now, is manifest in the share prices of telecom companies. Bharti Airtel share price in January 2008 was Rs 482. Before the 2G bid now, it was Rs 264, at almost half.
Take a comparison. If the land prices were low in 2001 and high in 2008, could the government have sold land in 2008 at 2001 rates to the first applicants without bid? Obviously not.
Assume the CBI had prosecuted those who undersold the land in 2008 and the land prices fall in 2012. Can they turn around and say that the land prices in 2012 should be substituted for its 2008 prices and they should be acquitted? What applies to land applies to spectrum as well. The loss to the government on sale of spectrum has to be computed under the market conditions that obtained in 2008 when the telecom industry was booming, not under the current market conditions when the telecom industry is doing only half as well as in 2008, though still several times better than in 2001.
Even now, Vodafone has bid for 14 out of the 22 circles; and Telenor for 5 circles at base prices. The bid amount of Vodafone is not known. But the Telenor bid [for 5 circles] is Rs 4,048, while, in 2008, pan-India spectrum [22 circles] was sold to Telenor for Rs 1,658 cr. For these five circles alone, the government had lost Rs 2,598cr in 2008. The number of circles in issue is 122. This is not to say that the loss would be proportionately high. But that it would be a staggering sum, not Rs 2,645cr as R P Singh falsely says, is established by bids for spectrum now.
QED: Zero tolerance to corruption does not mean knocking out the zeros in the amount of loss–or what it yields namely, BRIBE.
S. Gurumurthy is a well-known commentator on economic and political issues.