There could not have been a worse Diwali gift for the UPA government than the ‘tepid response’ to the 2G spectrum allocation bid. In this season of double dhamaka, the lack of interest shown by the operators to bid for the allocation of spectrum in even major circles like Delhi and Mumbai has come as a double whammy for the government. First it could seriously jeopardise the government’s plans to reduce fiscal deficit. With less than Rs 10,000 crore being raised from the auction, the government will find it difficult to meet the revised fiscal deficit target of 5.3 per cent of GDP. The government was hoping to raise Rs 28,000 crore from the current round of allocation bid.
Secondly it could also open the Pandora’s Box on 2G allocations under erstwhile telecom minister A Raja, who had quit after the Comptroller and Auditor General (CAG) in its report in 2010 said that the allocations made in 2008 caused a presumptive loss of Rs 1.76 lakh crore to the public exchequer. The daggers are already out for the CAG with some calling him a munim (accountant) who could not correctly value the cost of the spectrums.
However, a closer analysis of the funds raised by the government during the just concluded auction would not exactly present a very dismal picture. In 2008, A Raja using the first-come-first-served policy had given out 122 licences raising just Rs 9,200 crores. In 2012, the government has managed to raise Rs 9,400 crore by giving permits for just 19 mobile circles. Therefore despite it being called tepid, the response to the fresh bid has managed to negate telecom minister Kapil Sibal’s ‘zero-loss’ loss theory. However, in the same vein it needs to be pointed out that CAG’s valuation of the loss too was on a much higher side. A large part of the spectrum, which became free following the Supreme Court cancelling 122 permits issued by the ministry then led by A Raja in 2008, were put up for bid in this round. There is an opportunity for telecom minister Kapil Sibal in the ‘tepid’ response, which could also be fallout of some kind of cartelisation, to the current round of allocations. He could take a few lessons and make the base price more practical as well as keep the process transparent. Through allocation by bidding while the nation stands to gain, the government too stands to salvage its ruined reputation.
Secondly it could also open the Pandora’s Box on 2G allocations under erstwhile telecom minister A Raja, who had quit after the Comptroller and Auditor General (CAG) in its report in 2010 said that the allocations made in 2008 caused a presumptive loss of Rs 1.76 lakh crore to the public exchequer. The daggers are already out for the CAG with some calling him a munim (accountant) who could not correctly value the cost of the spectrums.
However, a closer analysis of the funds raised by the government during the just concluded auction would not exactly present a very dismal picture. In 2008, A Raja using the first-come-first-served policy had given out 122 licences raising just Rs 9,200 crores. In 2012, the government has managed to raise Rs 9,400 crore by giving permits for just 19 mobile circles. Therefore despite it being called tepid, the response to the fresh bid has managed to negate telecom minister Kapil Sibal’s ‘zero-loss’ loss theory. However, in the same vein it needs to be pointed out that CAG’s valuation of the loss too was on a much higher side. A large part of the spectrum, which became free following the Supreme Court cancelling 122 permits issued by the ministry then led by A Raja in 2008, were put up for bid in this round. There is an opportunity for telecom minister Kapil Sibal in the ‘tepid’ response, which could also be fallout of some kind of cartelisation, to the current round of allocations. He could take a few lessons and make the base price more practical as well as keep the process transparent. Through allocation by bidding while the nation stands to gain, the government too stands to salvage its ruined reputation.