When the opposition was crying foul and demanding telecom minister A Raja’s resignation for the 2G spectrum scam, they were only underestimating the DMK leader, it seems. In a yet-to-be-released damning report, the Comptroller and Auditor General (CAG) has blasted the minister for inflicting losses of Rs 90,316 crores to Rs 1,76,379 crores to the government in the grant of the 2G spectrum licences to a chosen few operators in 2008.

This is much above the opposition charge of Rs 70,000 crore scam. The CAG worked out the losses on the basis of two criteria: an offer made by the Chennai-based M/s S TEL Limited in December 2007 and the revenue earned in the 3G spectrum auction in June this year.

It said the two rates were cited "only to highlight the economic value of spectrum considering the different indicators available in the market." The Department of Telecommunication (DoT) is quoted in the report rejecting the calculations of the notional loss as "a hypothetical arithmetic exercise and not correct."

"The Hon'ble Minister of Communications and Information Technology for no apparent logical or valid reasons ignored the advice of Ministry of Law and Ministry of Finance, avoided the deliberations of the Telecom Commissions to allocate 2G spectrum, a scarce finite asset at less than its true value on flexible criteria and procedures adopted to
benefit a few operators," says the concluding paragraph of the 45-page report.

"TRAI (Telecom Regulatory Authority of India), the regulator, also stood by as a helpless spectator when its recommendations were being either ignored or misused," adds the report.

In its SOS to DoT in August 2007, TRAI had tried to stall the minister's bid to sell off the licences at the 2001 rates. The CAG report quotes TRAI then state: "...in today's dynamism and unprecedented growth of telecom sector, the entry fee determined in 2001 is also not the realistic price for obtaining a licence. Perhaps it needs to be reassessed through a market mechanism."

All that the government earned in the sale of the 2G UAS (Universal Access Service) licences was paltry Rs 9,013 crores and another Rs 3,372 crores from the spectrum allotted under the dual technology, the CAG report points out. The total revenue so earned was Rs 12,385 crores. It would have been Rs 1.77 lakh crores if DoT had gone for auction alike 3G, the report said.

The report is yet to be tabled in Parliament but the opposition has seized its copy to create a rumpus in both the Houses on Wednesday to demand an immediate resignation of Raja.

A combative Raja, however, refused to quit, asserting that "I can tear the BJP into pieces with the same arguments made in the CAG report." He points out that he was a minister also in the BJP-led NDA government and as such he is privy to the spectrum fraud of that regime. "But I will not be a backstabber to the then government or the present government," he added in his defence.

Excerpts from the CAG report:

"The entire process of spectrum allocation was undertaken in an arbitrary manner. The Hon'ble Prime Minister had stressed on the need for a fair and transparent allocation of spectrum, and the Ministries of Finance and Law had sought for the decision regarding spectrum pricing to be considered by an EGoM (empowered group of ministers).

"Brushing aside these concerns and advices, the Department of Telecommunications, in 2008, proceeded to issue 122 new licences for 2G spectrum at 2001 prices, thus flouting all rules and procedures to be followed in a parliamentary democratic setup.

"The process followed was also unfair, considering the fact that DoT did not follow its own guidelines on eligibility conditions, arbitrarily changed the cut-off date for receipt of applications post facto and altered the conditions of the FCFS procedure it had been following, and gave unfair advantage to certain companies over others, thus creating an environment which cannot be perceived as transparent and fair.

"Given its scarcity value and increasing demand, a comprehensive evaluation of available spectrum was required which was not done.

"...the correct value of 2G spectrum allotted to 122 licences in January 2008 and the 35 licences under dual technology, also in 2008, could have been determined only by a market driven process.

"Its presumptive value, based on various available indicators, ranged between 90,000 crore and 140000 crore. In addition, the value of additional spectrum allotted beyond the contractual amount to existing nine operators, based on 3G rates, works out to 36729 crores.

"The offer made by M/s S Tel is included in this report only to indicate the market perception of the value of the 2G spectrum which could have accrued to the government if DoT had resorted to a bidding/auction process, which was however not intended also as per the policy implemented by DoT."