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2G scam caused loss of Rs 1.40 lakh crore: CAG

In fresh bad news for Telecom Minister A. Raja, the Comptroller and Auditor General (CAG) has concluded the 2G spectrum scam caused a loss of R1.40 lakh crore to the nation.

delhi Updated: Oct 10, 2010 23:49 IST
Nagendar Sharma
Nagendar Sharma
Hindustan Times

In fresh bad news for Telecom Minister A. Raja, the Comptroller and Auditor General (CAG) has concluded the 2G spectrum scam caused a loss of Rs 1.40 lakh crore to the nation.

The amount is double of what even the opposition parties had alleged so far.

In a severe indictment of Raja and his ministry, the CAG’s two draft reports on which the government has to respond in the Supreme Court by October 22, states that the telecom ministry carried out the entire process of spectrum allocation in 2008 in an “arbitrary manner” ignoring advice of other ministries.

“Ignoring the advice of the law ministry and even the Prime Minister, the Telecom decided to go ahead with arbitrarily on 2G spectrum allocation… The finance ministry also had in 2007 questioned the sanctity of continuing with 2001 prices,” states the CAG report.

The issue puts the Centre in an awkward position, since its attempt to keep the CAG away from the scam has failed. In August, the telecom ministry had obtained a controversial opinion from the law ministry, which stated that the CAG and CVC do not have the powers to challenge policy decisions.

With the Supreme Court having sought a response, the Centre will have to explain its position on the powers of the CAG and the CVC.

The CAG has put the loss by this scam at Rs 1.40 lakh crore. The CPI(M), which was the first to raise the issue, had alleged a Rs 70,000 crore scam. CAG has taken into account the revenue generated by the auction of 3G and BWA (Broadband Wireless Access) earlier this year. These value added services fetched the government Rs 1.08 lakh crore.

“3G and BWA services account for merely eight per cent of the mobile subscribers and look at the revenue generated for the government by their auction, you can imagine what government would have earned had the auction of 2G been allowed,” said a highly placed source.

“The telecom ministry for no apparent and logical or valid reasons ignored the advice of ministries of finance and law, avoided the deliberations of the Telecom Commission to allocate 2G spectrum, a scarce finite national asset,” says the report.

“Despite all agencies having knowledge of scarcity and underpricing of spectrum, the entry fee for issue of licences continued to be pegged at the rates determined in 2001,” it says.

CAG has rejected telecom ministry’s argument that spectrum allocation was done in accordance with the policy laid down by the previous government. “The claim that policy of predecessors was followed is wrong. The Cabinet in 2003 had directed auction for all allotments in future,” the CAG said.

First Published: Oct 10, 2010 23:47 IST