The telecom ministry has said that policy decisions cannot be "assailed" as arbitrary while debunking government auditor CAG's reported assertion that 2G spectrum was allocated in an arbitrary manner causing a loss of Rs 1,76,700 crore to the exchequer.

"Decisions (on spectrum) taken on the basis of New Telecom Policy of 1999 and the Cabinet decision of 2003, coupled with periodic and respective TRAI's recommendations.

"(This) cannot be assailed by the audit as arbitrary or cause of exchequer loss until and unless the entire policy devised with legislative backing is changed or modified by the same authorities concerned," DoT has said in its reply to the Comptroller and Auditor General.

CAG has reportedly put the revenue loss to exchequer at up to Rs 1.40 lakh crore in addition to another Rs 36,700 crore on allocation of spectrum beyond contractual limit to existing nine operators. In 2008, the DoT had issued 2G spectrum to eight new operators at Rs 1,658 crore for pan-India operations.

The Department of Telecom (DoT) has asserted that there was no loss to the exchequer due to distribution of new licences in 2008.

"There was no loss of any potential revenue due to non-revision of entry fee for award of licences and non- auction of 2G spectrum, rather the said policy of grant of licences was not changed since introduction because this has resulted in unprecedented growth of telecom services," DoT said.

Moreover, the DoT officials said that this was not the final report of the CAG. The final report of the apex auditor has to be placed in Parliament and then is forwarded to the Public Account Committee for further scrutiny.

"In conformity with the established procedures and rules as well as the provisions enshrined in Unified Access Services Licence (UASL) guidelines and NTP'99, the policies were only implemented by the present Minister of Communications and IT which resulted in tangible, exponential and unprecedented growth in the sector with high teledensity and lower tariffs," the DoT has said.

With the increase in teledensity and increase in overall revenue of the sector, the annual licence fee and spectrum charges payable as revenue share to the government is increasing year after year and so far the government has collected about Rs 77,938 crore till March 2010 as licence and spectrum fee.