2G: Loss numbers don't matter much, but crime is key

Rs 1,76, 000 crore is a dramatic number. That was one of the presumptive loss figures from the 2008 2G spectrum allocations made by A Raja at 2001 prices, according to the Comptroller and Auditor General (CAG) of India, Vinod Rai. It had its impact. It is part of the nation's collective consciousness now.

Rs 2,645 crore is not a small number either, though it pales in comparison with Rs 1,76,000 crore. This is the number supposed to have been arrived at by RP Singh, Director General of Audit (Post & Telecommunications), who conducted the 2G audit. Rai, according to a report in The Indian Express, overruled it. He based his estimates on the auction of 3G spectrum prices, among other things, while Singh pegged it on the basis of inflation costs.

The Central Vigilance Commission has put the loss figure at Rs 26,000 crore while the Central Bureau of Investigation (CBI) at a shade beyond Rs 30,000 crore. Telecom Minister Kapil Sibal has gone on record saying there was'zero loss' to the exchequer from the spectrum transaction — but not many have bought his estimates. There are other estimates based on the prices at which the beneficiaries sold off spectrum after availing themselves of spectrum on Raja's version of the first-come-first-served policy evolved during the NDA regime.

 2G: Loss numbers dont matter much, but crime is key

The numbers do not matter in the 2G scam as much as the criminal intent does. AFP

But these numbers serve to confuse rather than clarify. What is central to the 2G scam is not the numbers floating around. It is the criminality and criminal intent involved in the allocation process by Raja and the alleged violation of the government’s Business Transaction Rules that govern crucial financial decisions.

Raja's crime is simple. He circumvented rules to favour companies who did not meet the eligibility conditions for the licences. After he adopted the first-come-first-served basis for the allocation of spectrum, Raja advanced the cutoff date for receiving applications by a week from 1 October 2007 to 25 September. This was done allegedly with the specific intent of favouring some firms close to him.

This confines the 2G spectrum scandal to Raja alone. It was his decision.

The scope of the scandal gets wider when broader issues like Business Transaction Rules come into the picture. The cabinet decision of 31 October 2003 - with which the Department of Telecom concurred in the present case - specifies that "the DoT and ministry of finance (MoF) would discuss and finalise spectrum pricing formula, which will include incentive for efficient use of spectrum as well as disincentive for sub-optimal usages."

According to the report of Justice Shivaraj Patil, which studied the allocations, the spectrum pricing had to be finalised by DoT and MoF as required by the cabinet decision of 2003. The report of the CAG, too, points at the lapse. But bigger than the relevance of the 2003 decision is Rule 4 of the Government of India (Transaction of Business) Rules.

Article 77(3) of the Constitution clearly stipulates that any decision which may involve
"any abandonment of revenue or otherwise have a financial bearing, whether involving expenditure or not," cannot be done without the concurrence of the finance ministry. In case the finance ministry fails to take a position, the issue would be decided by the cabinet.

Clearly there are too many loose ends in the government's position here. It has not even come up with a coherent argument on whether Raja’s decision was his own or it had the approval of Chidambaram, the finance minister then. It has now come to light that senior officials at the finance ministry were in favour of revising the prices at which spectrum was sold — they were sold at 2001 prices — and taking the auction route. Did Chidambaram work in tandem with Raja?

This gives credence to the opposition's position that the home minister is as much responsible for the 2G mess as Raja is. He did not stop the latter.

Under Rule 7 of the Government of India (Transaction of Business) Rules, all the cases specified in the second schedule, which include cases involving financial implications on which the minister of finance desires a decision of the cabinet, and the cases in which a difference of opinion arises between two or more ministers and a cabinet decision is desired, must be brought before the cabinet. Chidambaram, obviously, did not resort to it.

Was it finally an act of omission or commission from Chidambaram? That is for the Supreme Court to decide.

Getting into numbers and different calculations of the loss figure at this point hints at an effort to distract attention from the core issue. It does not matter whether CAG came up with a number that was fantastic. Rs 2,645 crore would not have lessened the crime in any way.

Updated Date: Oct 03, 2011 19:23:07 IST