On his third and final appearance before the Joint Parliamentary Committee, looking into the 2G spectrum issue, Comptroller and Auditor-General of India Vinod Rai on Tuesday defended the various mechanisms and theories followed in reaching the “presumptive loss” incurred by the exchequer as the government failed to adopt a market-linked mechanism while giving away telecom licences in 2008.
Though agreeing with the JPC members' objections that the “presumptive loss” mechanism was neither mentioned in any legislation nor a practice to calculate loss in any government department, Mr. Rai said it was a globally accepted norm in an audit process to reach a loss figure. The government auditor calculated the presumptive loss figures, ranging between Rs.57,000 crore and Rs.1.76-lakh crore, by using his “generic sense,” JPC Chairman P.C. Chacko said briefing journalists.
Mr. Rai told the members that the term “presumptive” is used to indicate that there is a legal presumption that the taxpayers' income is no less than the amount resulting from an application of the indirect method….it refers to a number of procedures under which the basis itself is not measured but is inferred from simple indicators which are more easily measured.
Mr. Chacko said the CAG defended all his theories/mechanisms in reaching the presumptive loss figures, besides stating that the Telecom Regulatory Authority of India's recommendation to go for a separate consultation for finding the fresh value of 2G spectrum was the TRAI Chairman's “personal opinion.” Asked why the CAG failed to audit 51 licences given between 2004 and 2007, Mr. Rai said the Department of Telecommunications did not provide any document to the auditor.
Congress MP Manish Tewari objected to the CAG's “presumptive loss” figures, saying these were legally untenable and totally inappropriate. Moreover, he said, calculating loss was not the CAG's mandate, and the “presumptive loss” mechanism did not find any mention in the IT Act, as had been pointed out by the Central Board of Direct Taxes.
Sources said Gurudas Dasgupta of the CPI took on the Congress, saying its offensive against the CAG was aimed at “demolishing” the audit report. To his question whether the loss incurred by the public exchequer was “notional,” “nominal” or “substantial,” Mr. Rai replied: “Substantial.” He pointed out that the Director-General (Post & Telegraph), who prepared the draft reports, was always aware of all communication between the CAG and the ministries/departments concerned.
Chidambaram ‘failed'
Pointing out that out of the total of four episodes of giving away telecom licences so far, it was only in 2008 that the government did not adopt a market-driven mechanism, Mr. Dasgupta reportedly faulted the then Finance Minister, P. Chidambaram, for not enforcing a Cabinet decision and for failing to take steps to ensure auction of 2G spectrum to realise its true value.
