M A I N   N E W S

2G: JPC draft report punches holes in CAG’s loss calculation
K V Prasad/TNS

The panel says The CAG did not take cognisance of the benefits to the people especially at the grass-root level on account of policy implementation and benefits that outweighed any possible revenue foregone in the process with the objectives of increasing tele-density and welfare of the people It questioned how revenue realised for 3G in 2010 could be used for calculating the loss on account of 2G spectrum allocation in 2008 when the demand-supply position was also different observing it "is something that needs proper justification" During evidence, the CAG conceded that there was neither any TRAI recommendation nor Cabinet decision to go in for 2G auction although there were references regarding the need for revision of licence fee and spectrum charges from the Prime Minister's Office and the Ministry of Finance

New Delhi, April 19
The Joint Parliamentary Committee probing the 2G Spectrum allocation issue punched holes into the basis on which the Comptroller and Auditor General of India arrived at Rs 1.76 lakh crore presumptive loss describing the exercise as “ill-conceived” while being critical of the earlier NDA Government for forgoing Rs 42,000 crore revenue as licence fee when it offered migration package to telecom operators.

Referring to the Telecom Regulatory Authority of India (TRAI) for its consistent stand against auction of spectrum and increase in the entry fee for new players by way of indexation or otherwise, the draft report observed: “It is astonishing how the CAG can consider calculating loss, be it actual or presumptive, on account of allocation of licences and spectrum. The committee is, therefore, of the considered view that the very move for calculation of any loss on account of allocation of licences and spectrum is ill-conceived. It is imperative that the calculation of loss to the exchequer on account of allocation of licences and spectrum has to be viewed in the context of the overall policies laid down for the telecom sector from time to time”.

Expressing “grave concern” that while calculating presumptive loss on policy prescription by the government, the report said the CAG did not take cognisance of the benefits to the people especially at the grass-root level on account of policy implementation and benefits that outweighed any possible revenue foregone in the process with the objectives of increasing tele-density and welfare of the people.

In its over 600-page two-part draft report, including over 250 pages of annexure, the JPC headed by PC Chacko of the Congress went through each of the indicators on which the CAG worked out the “presumptive loss”, including one the basis of offer made by S.Tel through an application in 2007 for Unified Access Service (UAS) Licence, value based on prices discovered for 3G Spectrum; through sale of equity by UAS licence firms such as Unitech, Swan Telecom and S.Tel had offered to pay an additional Rs 6,000 crore for a pan-India licence over and above the spectrum charge/revenue sharing as per existing policy.

It questioned how revenue realised for 3G in 2010 could be used for calculating the loss on account of 2G spectrum allocation in 2008 when the demand-supply position was also different observing it “is something that needs proper justification”.

The report states that during evidence, the CAG conceded that there was neither any TRAI recommendation nor Cabinet decision to go in for 2G auction although there were references regarding the need for revision of licence fee and spectrum charges from the Prime Minister’s Office and the Ministry of Finance. ‘However, such suggestion does not by themselves enjoy any mandate unless and until they are transformed into decision.”

The other recommendations/observations in the report include on the role of TRAI, suggesting an amendment in the Act to incorporate provisions to ensure that a harmonious balance is maintained between the regulator and the licensor in the matter. It also said the government should decisively respond to TRAI recommendations within a specific time frame just as the regulator has to within 60 days to any reference by the government.

On spectrum pricing, the draft report observed that its allocation is not managed with the seriousness it deserves, particularly keeping in mind its scarcity and value. It also commented on the tendency on the part of the licensee to hoard it and suggested that quantification of available spectrum be made by the department concerned periodically and offer it to service providers and public through notification on its official website.