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What caused the 2G scam

Non-auction of 2G spectrum and its allocation at 2001 rate by the telecom ministry to 122 applicants in 2008 were at the root of the scam that caused a loss of over R30,984 crore to the exchequer as then minister A Raja deliberately acted in a “dishonest” manner.

delhi Updated: Apr 05, 2011 00:19 IST
Satya Prakash

Non-auction of 2G spectrum and its allocation at 2001 rate by the telecom ministry to 122 applicants in 2008 were at the root of the scam that caused a loss of over Rs30,984 crore to the exchequer as then minister A Raja deliberately acted in a “dishonest” manner.

The CBI, which filed its first chargesheet in the case on Saturday against Raja and 11 others, including three companies, said: “Raja, despite the repeated suggestions from various corners…for the revision of entry fee to be charged from the new

UAS licencees and dual technology applicants, deliberately and dishonestly did not consider auction or revision of entry fee, and gave away licences at same fee which was discovered in 2001.”

“In the year 2007-08, when the dual technology spectrum was allotted by him (Raja) to few companies and also new UAS licences were issued to as many as 122 applicants, the circumstances had entirely changed since 2001. In such changed circumstances, the new UAS licences as well as dual technology spectrum were required to be either auctioned or allocated on established first come first served principle at a revised entry fee,” it said.

The probe agency listed at least nine circumstances, including “tremendous growth” in telecom sector since 2001, when in circles such as Bihar, Orissa, West Bengal and Assam no bidders came forward during the auction or were not having the sufficient number of operators, in support of its case.

How CBI calculated loss to govt?

The CBI used increase in “Adjusted Gross Revenue (AGR)” per megahertz (a unit of spectrum) per year to calculate the huge revenue loss caused to the exchequer. An operator’s AGR is the total revenue earned by it through sale of services, handsets and any interest accrued on the revenue earned.

Based on AGR per MHz per year during 2002-03 to 2007, which grew by 3.5 times during this time, the CBI calculated the loss at RS30,984.55 crore (R22,535.60 crore towards entry fee of new UAS licences and RS8,448.95 crore in respect of fee paid by Dual Technology users).

The CBI accused Raja of deliberately ignoring the advice of Prime Minister’s Office and finance and law ministries as he was acting in accordance with a criminal conspiracy hatched with Unitech’s Sanjay Chandra, Swan Telecom Promoter Shahid Balwa and DB Realty’s Vinod Goenka.