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Updated: December 17, 2011 15:24 IST

CAG digs in his heels: it's Rs. 1.76 lakh crore

B. Muralidhar Reddy
Comment (18)   ·   print   ·   T  T  
The Hindu

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.

Three-stage audit

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.

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We salute the C &AG mr Vinodh Rai for boldly asserting the truth . The pity is all the people in the UPA (including unfortunately Dr Mounmohan Singh (he keeps mum on important issues) have been downgrading the Constitutional Office of the Comptroller and Auditor General. We feel sad that there is not single patriotic minded minister in the present UPA Govt ( is there a functioning Government at the Cntre ?

from:  S Mani
Posted on: Dec 17, 2011 at 13:46 IST

Congratulaationsd to Mr Vinod Rai the bold C&AG of India. Unlike one of his predecssor who opposed the then rfuling party and got nominastion to RS, Governonship etc, I think such temptations might have been spurned by Mr Rai. I also feel pity that responsible people in the Government does not appear to know the exact duties of the C&AG. The organisation should be made trulyh independant and entire expenditure of that organisation including that of all wings should be outside the control of Finance Minisgtry and Govt. Then we can see and experience what is independant audit and what is the capability of&AG ofn India.

from:  Gopalakrishnan
Posted on: Dec 12, 2011 at 19:39 IST

I am glad to hear this good news. Kudos to Mr. Rai. Now JPC may dither. Let us see.

from:  Soundararajan Srinivasa
Posted on: Dec 12, 2011 at 19:27 IST

People on treasury benches are so confused that they find it so difficult to evolve a strategy to control the damage to govt's image. Their incompetence is so bad that people have started doubting fundamentals of Indian polity. This doubt on Indian system is far more dangerous than the harm done by all the scandals. Government should acknowledge that it made mistake, and start correction so that faith in system can be repose, else everyone in this country is set to lose heavily.

from:  vivek singh malik
Posted on: Dec 12, 2011 at 18:37 IST

There is no denying the fact that a scarce resource of the nation was allowed to be used by people at a very low cost, In fact Pranab Mukherjee on record admitted that revenues from 3G (which was auctioned) has helped reduce fiscal deficit after presenting his last budget. If Congress is so sure that the loss is Rs 2645 crore or zero loss as advocated by Kapil Sibal, why don't they re-auction and prove people that they have done nothing wrong, infact this will redeem the prestige of our honest PM and lay this matter to rest.

from:  GANESH R
Posted on: Dec 12, 2011 at 18:28 IST

The issue of 2G spectrum licence by the telecom minister in 2008 at 2001 price is wrong.So also the calculation of the loss on 2G spectrum licence in 2008 on the basis of the revenue realised by the 3G auction in 2009/2010 is also wrong.Similarly the other two methods are also wrong.The unfair method adopted by CAG reveals his
poor abiliy and knowledge.

from:  SANKARAN
Posted on: Nov 23, 2011 at 16:35 IST

From the last statement 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 . Raja to do right to all manner of people by increasing teledensity took the decision not to auction. Rai to the best of his ability calculated the loss of not auctioning. paradox

from:  Kumar
Posted on: Nov 23, 2011 at 14:23 IST

Kudos to the CAG Mr.Rai to standup and not bow to Congress pressure. The JPC Chairman mr Chacko will go to any length to fudge facts and the save emabarassament to the Congress. Wish that other Bureaucrats learn from the Spine Shown by the CAG office and also the inherent power vested in Such offices by the Constition needs to be fully brought to light.

from:  D Senthil Kumar
Posted on: Nov 23, 2011 at 13:18 IST

You cannot run away from "Truth". It is will catch you no matter where you hide. The CAG has to be given a big credit for speaking up and stick to his call of duty. It is a shame to sell a product in 2008 at 2001 prices. This is how Manmohanomics economics works in this country.

from:  Vijay Agnihotri
Posted on: Nov 23, 2011 at 13:18 IST

Wish every government officers especially the IAS and IPS officers stick to their call of duty like the present CAG. If everybody does their duty day in and day out, our Country will improve on its own incrementally.

from:  Chanemougam.R
Posted on: Nov 17, 2011 at 09:36 IST

The CAG appears to be too technical to defend their report on alleged loss. Yet, till now, they are unable to arrive at the exact loss. If everything is presumptive, can we act upon presumptions? Can we hang persons on unverified and unconfirmed facts and data?

from:  A.Xavier
Posted on: Nov 16, 2011 at 21:34 IST

The Saying in Kannada is "ADIKE KADDARU KALLA, AANE KADDARU KALLA ", literally meaning " Thief is a thief if he has stolen a Beatle nut (Supari) or an Elephant ", the size does not matter the action of stealing has to be Judged. If the loss is Rs 1.76 lakh crores or is Re 1/ it is a loss and to be judged as theft or misappropriation or loss due to neglect depending on circumstances. People have gone to jail for much less than the amount in question,then where do the argument for the quantum of the amount stand. It only shows that there is no intention of carrying out the justice,which is the right bestowed with the judiciary. So let the investigation be done without political interference and Judiciary judge the matter.

from:  viswanatha
Posted on: Nov 16, 2011 at 18:45 IST

The more the Congis are trying to belittle and needle the CAG, the more they are getting exposed. I felt that the reply to PM itself was superlatively balanced, respectfully worded and to the point maintaining the CAG's independance. Now, this presentation has further enhanced my appreciation and respect for Sh. Rai. Hope the Congress learn fast and stop berating the Cosntitutional bodies.

from:  ss
Posted on: Nov 16, 2011 at 17:51 IST

Well Done Mr.Rai... Congratulations... But will not be surprised if the politicians stick to the part stand of Mr.R P Singh!!!

from:  Venkat
Posted on: Nov 16, 2011 at 12:03 IST

This is his best to make the Politicians understand that they are bound by the Constitution and he has the duty to have a check on that. Kudos to CAG

from:  kumar
Posted on: Nov 16, 2011 at 11:30 IST

The effort by Congress to hide the rampant corruption among politicians and to reign in the independent audit wing of the Government should not be allowed to succeed.

from:  Sankar
Posted on: Nov 16, 2011 at 08:10 IST

Justice cannot be denied.CAG has exposed the attemptsby vested interests.

from:  K.Sugavanam
Posted on: Nov 16, 2011 at 07:26 IST

The CAG Vinod Rai is to be congratulated for his firm stance despite pressures brought about by those who do not want the truth to be revealed. Given autonomy, I am sure that the CBI will also track down people who loot the country without fear.

from:  krishna
Posted on: Nov 16, 2011 at 03:12 IST
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