In a staunch defence of the calculation of Rs. 1.76-lakh crore presumptive loss to the exchequer on account of the award of 2G spectrum in 2008 at the prices of 2001, the Comptroller and Auditor-General on Tuesday argued that a strong case for revision of prices was made by the Union Finance Ministry and concurred with by the Prime Minister's Office (PMO).
In a PowerPoint presentation to the Joint Parliamentary Committee, which is examining the telecom policy from 1998 to 2009, CAG Vinod Rai dwelt at length on the criteria adopted by his office in calculating the presumptive loss. He pointed out that the Finance Ministry and the PMO, in their separate communications in 2007, recommended revision of the methodology adopted by the Department of Telecommunications (DoT).
The nearly six-hour presentation, followed by a question and answer session, came a day after the then Director-General (Post &Telegraph) in the CAG, R.P. Singh, explained the basis on which he had pegged the ‘actual loss' at Rs. 2,645 crore.
Mr. Rai said Mr. Singh, in the same note in which he calculated the loss at Rs. 2645 crore, also gave some estimations of loss for further consideration such as Rs.10,2000 crore and Rs.65,000 crore. In his May 31, 2010 letter addressed to the CAG, Mr. Singh suggested that further audit be carried out if required.
The presumptive loss of Rs. 1.76 lakh crore, in the final report in 2010, has been a subject of intense debate for several months with senior leaders of the ruling UPA contending that the CAG has overstepped its mandate by getting into a policy matter while its role is restricted to audit.
Quoting from the noting in the Finance Ministry files, Mr. Rai told the JPC that if spectrum were to be priced, the option before the DoT was auction or charging a market-determined price. “While the MoF [Ministry of Finance] gave two parameters for calculating the value of spectrum, neither was conclusively suggested. If so, how can the government itself thereafter orchestrate a “no loss” hypothesis?”
Communications Minister Kapil Sibal asserted, days after he took charge of the Ministry following the resignation of A. Raja, that there was ‘zero loss' to the exchequer. In one of the notings in 2007, the Finance Ministry had maintained that economically there would be a case for increasing the entry fee for technology crossover and said the entry fee could be calculated on the base of the 2001 auction price weighed with the improvement in technology, and demand in terms of subscribers as well as per subscriber traffic.
Mr. Rai told the committee that different loss figures were projected in the three-stage audit process of the CAG. The Field Audit Report carried figures of Rs.48,000 crore and Rs.26,000 crore.
It was redrafted by the office of DG (P&T) and figures of Rs. 2,645 crore, Rs. 2,651crore and Rs.36,000 crore were incorporated in the report. The office also mentioned figures of Rs.1,02,000 crore and Rs. 65,000 crore.
In stage III of the audit done by the CAG headquarters after examination of ‘records not available earlier', a range of figures from Rs. 58,000 crore to Rs.1, 76,000 crore emerged.
Elaborating on the term ‘presumptive,' Mr. Rai said it was a term which was part of the Direct Tax Code, and the Income Tax Code recognised and used the terms ‘presumptive income' and ‘presumptive tax'. Further, it was the normal practice of the office of the CAG to cite figures on the basis of presumptive losses.
On the criticism that the CAG had overstepped its mandate in preparation of the 2G spectrum report, Mr. Rai said the report only sought to examine implementation of the policy. “The entire implementation process does not withstand the test of scrutiny, and hence, the widely held belief that it has benefited a few operators and has not been able to maximise generation of revenue from allocation of such a scarce resource.”
The CAG said an adversarial role between Audit and the Executive was inherent in the structure of polity. There was a difference in the oaths of a Cabinet Minister and the CAG: A Cabinet Minister takes the oath to conscientiously discharge his duties as Minster for the Union and to do right to all manner of people in accordance with the Constitution and the law. The CAG takes the oath that he will, duly and faithfully and to the best of his ability, knowledge and judgment, perform the duties of his office and uphold the Constitution and the laws.