A comprehensive overhaul of how the CAG calculates presumptive loss figures demanded

The Manmohan Singh government and the Congress have gone on the offensive questioning the Comptroller & Auditor-General’s estimate of a Rs. 1.76-lakh crore loss to the exchequer resulting from spectrum allocation at rates fixed in 2001, while also demanding overhaul of the CAG’s method of calculations.

Lending ammunition to the Government — and the Congress’ — firepower is the latest auction of 2G spectrum that flopped, yielding only Rs. 9,407 crore, barely a fourth of the amount that was expected.

The Government has demanded a comprehensive overhaul of how the CAG calculates presumptive loss figures when a resource is not auctioned off but sold in any other manner. The Supreme Court ordered the auction after cancelling 122 2G licences of operators in February 2012.

On Thursday, the new Information & Broadcasting Minister Manish Tewari led the government attack, asking CAG Vinod Rai why the spectrum auction had yielded so little: “Mr. CAG, where is the 1.76 lakh crore?”

“It’s time the CAG introspects on his processes and it is high time that the BJP and some of the other Opposition parties which had made this their holy grail over the last two years publicly apologise,” he added. From the party it was general secretary Digvijay Singh leading the charge: “The CAG should reconsider how far its estimate was right with regard to the report, which it had earlier given and the losses that it had computed [in spectrum allocation two years ago].”

He dismissed suggestions that the auction yielding less revenue this time was a reflection of telecom companies’ disenchantment with the Government.

Telecom Minister Kapil Sibal, however, said the Government was not there to score points. “Our point always was that market dynamics should be allowed to play out. The moment you start dealing with the market directly or indirectly then it will be bad.” The Government should intervene only when required and its purpose was to ensure development and prosperity. “We are not here to feel vindicated,” he said.

The Government had targeted a minimum of Rs. 28,000 crore from the sale of 2G spectrum in the GSM band and the lukewarm response may upset its efforts to meet the revised fiscal deficit target of 5.3 per cent of the Gross Domestic Product. Overall, the Government had budgeted Rs. 40,000 crore as revenue from spectrum sale this fiscal. The CAG in 2010 said the then Telecom Minister A. Raja’s decision to give away spectrum at rates fixed in 2001 had caused a presumptive loss of Rs. 1.76 lakh crore to the exchequer.

“Devil’s advocate”

Meanwhile, the Opposition again attacked the Government for taking on the CAG. “If the Government argues like that, it will only be the Devil’s advocate,” said the CPI(M)’s Nilotpal Basu, adding, “Because you will always have to remind yourself of the fact that the then Telecom Minister A. Raja gave out 122 licences for Rs. 9,200 crore. Thus the 22 licences which were on auction this time have already fetched more than what they had got for all 122 licences then.”

The BJP, too, hit back at the Government. “Government keeps looking for ways to attack Constitutional institutions like the CAG which are acting in a fair and independent manner,” said party vice-president Mukhtar Abbas Naqvi.