Shouldn't government recover and auction 2G licences afresh?

GN Bureau | November 16, 2010



The CAG report indicting former telecom minister A Raja has been tabled in Parliament and it is now official that India lost up to Rs 1.76 lakh crore on account of the 2G spectrum allocation in 2008. Raja has already lost his job, the Congress party has managed to reassert its authority in the coalition government that it leads at the Centre and the prime minister seems to have had his way in naming the replacement.

Yet, the issue of the colossal loss of revenue remains to be addressed. Resignation of the minister concerned can at best be considered a belated acknowledgment of wrongdoing. It cannot automatically make up the loss of revenue to the exchequer.

Sunil Jain, opinion editor of The Financial Express newspaper, has argued in an edit page piece in The Indian Express that the government should cancel the 2G licences and go in for a fresh allocation through the telecom regulator TRAI. Jain points out that, as per the CAG, 85 of the 122 licences were issued to bidders that did not meet the norms laid out by the telecom ministry. Moreover, the companies that were allotted the licences were required to roll out 10 per cent of their services by the end of the first year and fully by the end of the three years. As per the stipulations, the companies stood to lose their licences in case they delayed the roll-out.

Since, as Jain rightly concludes, there is no way the government can make up for their lapses of the former telecom minister, shouldn't the government recover the licences and auction them afresh at fair market prices?

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