(Update: The Central Bureau of Investigation has moved Delhi High Court against the acquittal of ex-telecom minister A Raja, DMK MP Kanimozhi, other accused in the 2G spectrum case)
The great 2G scam
Loss to the nation: Rs 17,66,45,00,00,000. This is what the Comptroller and Auditor General (CAG) report showed when India “gifted away an important national asset at throwaway prices”, instead of allocating the 2G spectrum to the highest bidder in 2008. The calculated loss stood at Rs 1.77 lakh crore. However, a special court on Thursday acquitted all accused as the “prosecution miserably failed to prove any of the charges”. We take a look back at the 2G scam which has failed to be proven, what the entire controversy was, and what changed after that.
What is spectrum?
Spectrum is a collection of electromagnetic waves that allows transmission sound and data. Spectrum is a natural resource and a national asset. The government allocates frequencies of these electromagnetic waves to telecom and communication companies to operate their voice and data services.
Spectrum allocation auction — the one that did not happen in 2008
India is one the first countries to adopt the allocation of spectrum through auction or bidding, going as back as 1994. It first happened in 1994 when the government of India auctioned radio waves in 900 MHz band. It was done again in 1995, 1997, 2000. The government auctioned radio spectrum in the 1800 MHz band using a three-stage auction process in 2001. Later, the auction took place in 2010, 2012, 2013, 2014, 2015, 2016 and 2017.
Interestingly, the only time the auction of the spectrum did not take place was in 2008, the year in question now. At the time, the 2G spectrum was allocated to operators for nominal fees.
The 2G scam
On 17 December 2011, then Janata Party leader Subramanian Swamy stood in the witness box and read a letter written by then Finance Minister P Chidambaram to then telecom minister A Raja, which the latter is accused of ignoring. P Chidambaram in the letter had said: Spectrum is a scarce resource. The price for the spectrum should be based on its scarcity value and efficiency of usage. The most transparent method of allocating spectrum would be through auction.
But, it did not happen this way. The 2008 2G spectrum allocation was done using the first-come-first-serve basis and the price was fixed at the market price discovered way back in 2001. The CAG said it led to a loss of Rs 1.77 lakh crore in the state coffers. But there is more to the controversy. Besides the allegation of allocating the spectrum at “throwaway prices”, it was also alleged that licenses were given to a handful of arbitrarily selected companies with no previous telecom experience; the cut-off date for applying was arbitrarily announced which made many companies lose out; and TRAI recommendations were cherry-picked to favour few select players.
Post 2G controversy
In 2012, the Supreme Court of India cancelled 122 licences given out in 2008, calling the allocation unfair. After the 2G controversy, the government switched back to the auctioning of the spectrum, and indeed witnessed highly competitive bidding, lending credence to the high revenue loss figures expounded by the then CAG Vinod Rai.
In 2010, 3G and 4G telecom spectrum were auctioned and the government received a total revenue of Rs 1.06 lakh crore, demonstrating the price that this resource could actually command in the market. Ever since the governments under the UPA-II and the NDA have allocated spectrums using competitive bidding and received huge sums of money as revenue.
Now, further emphasising on the value of spectrum, the present telecom minister Manoj Sinha said after the court verdict on Thursday that the government raised Rs 1.9 lakh crore in 2015 and Rs 65,789 crore in 2016, which was much more than that under the first-come-first-serve method.
First published on December 21, 2017, on www.financialexpress.com when the special court in Delhi acquitted all accused in the 2G case.