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Wednesday, July 4, 2012

After rigorous self-appraisal, CAG sticks to its guns on 2G

The CAG, after completing this month a detailed ‘internal appraisal’ of two of its most high-profile reports, has not just stood by its findings “regardless of media comments and the statements made by senior functionaries of the government,” but also substantiated them, citing additional crucial events.
The internal assessment has been done on its reports on the 2G spectrum scam of November 2010 and Civil Aviation (Air India) of September 2011.
The entire issue of irregularities in award of government contracts/licences in general, and specifically for scarce natural resources, to private parties, took centre stage. It gained further momentum with the arrest of the former Telecom Minister, A. Raja, and several senior industry leaders, starting February 2011.
Later, the debate took a new turn after the Prime Minister’s statement in June 2011 that it was not the CAG’s business to comment on policy issues and that it should limit itself to the mandate given under the Constitution. It is these events that have led to a rigorous internal self-appraisal by the CAG.

2G scam report

Where the 2G scam is concerned, the November 2010 report, apart from highlighting a massive loss to the exchequer, flagged violations in policy implementation such as illegal advancement of the cut-off date, manipulation of the first come, first served procedure, undue haste in granting Letters of Intent and undervaluing spectrum by selling it without auction in 2008 at 2001 prices. The report highlighted serious concerns over governance systems within the Department of Telecom and the consequent, undeniable loss to the national exchequer. The CAG provided 3 estimates based on specific evidence — 3G auctions and the Swan and Unitech transactions — along with a caveat that “the amount of loss could be debated.”

Internal appraisal

Appraising its own conclusion of a loss, the CAG cites the Supreme Court judgment of February 2, 2012 which concluded that the actions of Mr. Raja and officers of the DoT were “wholly arbitrary, capricious and contrary to the public interest, apart from being violative of the doctrine of equality. The material produced for the quote showed that the Minister for C&IT wanted to favour some companies at the cost of the public exchequer.”
The CAG has highlighted that the court independently cited the same reasons, for cancelling the licences, it had pointed out while concluding that a loss had been caused to the exchequer.
Criticised for having estimated a staggering Rs 1.76 lakh-crore revenue loss — as a result of auctions not being held for 2G — which the government has dismissed as being a presumptive figure, the CAG now says, “it is only fair to point out that TRAI’s latest [May 2012] collation of reserve price for 2G spectrum approximates the calculation in CAG [2010 2G spectrum] report.” In fact, the appraisal highlights that “TRAI has recommended a reserve price for 2G spectrum of Rs. 18,000 crore for a pan-India licence for 5 MHz spectrum which is higher than the 3G value of Rs. 16,750 crore for 5 MHz used by the CAG for arriving at a [loss] figure of 1,76,000 crore.”
The CAG’s internal assessment concludes that its 2G report clearly stated that it was only examining the “implementation of policy” and that policymaking was the government’s prerogative.
In the final analysis, the CAG says, the internal assessment points out that its 2G report “had highlighted the unjust and opaque manner of allocation of scarce natural resources” and that “the Supreme Court having taken note of the issue has directed that natural resources being the wealth of the people, the state necessarily needs to adopt a mode of auctions to ensure a just distribution of natural resources.” 
The Hindu

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