JPC rejects CAG’s calculation method, calls it ‘misleading’

Rejecting all three calculation methodologies of the CAG on the 2G spectrum loss, the Joint Parliamentary Committee’s draft report has slammed the auditor for the latter’s “misleading” and “ill-conceived” concept of presumptive loss. Saubhadra Chatterji reports.

Rejecting all three calculation methodologies of the CAG on the 2G spectrum loss, the Joint Parliamentary Committee’s draft report has slammed the auditor for the latter’s “misleading” and “ill-conceived” concept of presumptive loss.

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It also came down heavily on the auditor for questioning the government’s policy. “The committee would, therefore, like to uphold the prerogative of the Government in a Welfare State to formulate policies which should under no circumstance be subjected to audit or calculation of loss,” says the report.

CAG had used three indicators to arrive at three loss figures: On the basis of the offer by S.Tel in 2007 the 2G loss was Rs 67,364 crore. On the basis of the 3G spectrum price, it was Rs 1.76 lakh crore and sale of equity by UAS licensee firms, Unitech and Swan Telecom, the loss figures was pegged at of Rs 69,626 crore and Rs 57,666 crore respectively.

Pointing out that S.Tel was an ineligible company for spectrum allocation, the report argued: “the notional loss of revenue to the exchequer calculated on the basis of the S. Tel offer cannot be considered tenable.”

Countering the presumptive loss figure of Rs 1.76 lakh crore that had generated a political storm, the JPC report says, “How could the revenue realised in 2010 for 3G be used for calculating the loss on account of 2G spectrum allocated as far back as in 2008 where the demand-supply position was also very different is something that needs proper justification.”

It also pointed out that telecom regulator TRAI had not arrived at any final conclusion that 2G and 3G spectrum are comparable.

Rejecting the third indicator, the report said, “determination of value of licences and spectrum on the basis of legitimate infusion of FDI by means of fresh equity by the telecom companies is untenable.

It also concluded: “By any standards, the benefits far outweigh any possible revenue forgone by the government with the broad objective of increasing tele-density and maximizing welfare of the people.”