The Comptroller and Auditor General (CAG) has rejected allegations that it had discouraged lead auditor R P Singh in his work on the 2G spectrum report and justified the quantum of presumptive loss of Rs 1.76 lakh crore as based on certain market indicators of spectrum value.

Against the backdrop of reports that Singh, the then DG, Audit (Post and Telecommunications) had computed lower figures of loss and that his figure of Rs 2,645 crore was overruled, the CAG office sent a detailed reply to Parliament's Public Accounts Committee (PAC), looking into the issue.

On the suggestion that Rai had discouraged Singh from seeking comments from DoT which he wanted to include in the final report, the CAG note said there was "no question" of preventing the DG, Audit from taking such a step.

"There is no question of CAG wanting to prevent DG (P and T) from obtaining comments from DoT. It is part of audit procedure to obtain response from the department and consider the same before finalising the report," it said.

The CAG said the draft report was issued to the DoT on July 19 by Singh and their response was received on July 27 and August 31, 2010.

On the reason behind the government auditor choosing to calculate presumptive loss at Rs 1.76 lakh crore based on 3G auction prices, the CAG said audit tries to work out loss in all such cases where documentary evidences suggest a possible loss or wastage.

Since TRAI had not recommended charging 2G start up spectrum at 3G rates, Rs 1,02,497 was mentioned only in the covering letter.

The report mentioned a third figure of Rs 2645 crore as loss in respect of 122 licenses based on cost inflation index, "without acknowledging the market realities of telecommunication sector."

"It is quite clear that this report could not conclusively bring out the potential or likely loss and only highlighted the possibilities based on various parameters without complete examination of records," the note said.

It said further audit queries were raised with the DoT and relevant records of finance ministry were requisitioned and audited by the officers of DG (P and T) before a final draft was prepared after issuing the penultimate draft to DoT and the Indian finance ministry in July, 2010.

The note, which has been seen by CAG Vinod Rai, refutes claims that Rai had discouraged Singh - the lead auditor - from seeking comments of the DoT which he wanted to include in the final report.

"There is no question of CAG wanting to prevent DG (P and T) from obtaining comments from DoT...it is part of audit procedure to obtain response...," it said.