2G ‘Scam’: How the CAG Report Gave Us a Number for Corruption

Video editor: Sandeep Suman

It’s a number India won’t ever forget – 176. And ten zeroes.

In 2010, the country’s top most auditor, the Comptroller and Auditor General of India, told us that we had suffered a loss of an astronomical Rs 1.76 lakh crore rupees because of former Union Minister A Raja’s telecom policy.

But seven years after two PILs exposed what came to be known as the ‘2G scam’, we were told there was no proof of said scam. In December 2017, a CBI court in Delhi acquitted all accused of all charges.

But, how did this turnaround happen?

The Beginning of the ‘2G Scam’

Rewind to 2008.

Manmohan Singh was Prime Minister, the UPA was in its first term, and India’s telecom sector was booming. The 2G spectrum allocation would’ve allowed newer telecom companies to enter the field. It would have led to more subscribers and competition. For the consumer and the entrepreneur, this would be a win-win situation.

But a series of PILs was filed by independent journalist Paranjoy Guha Thakurta, the then-general secretary of the Centre for Public Interest Litigation, Prashant Bhushan, and Anil Kumar, the former secretary of the Telecom Watchdog NGO. These PILs cast a shadow of doubt over the allocation.

And then, in 2010, the CAG submitted its damning report.

The basic allegation was that the then telecom minister A Raja had undersold national resources to favour certain corporates in exchange for kickbacks. The aam aadmi couldn’t be bothered much with the technicalities, but was left dumbstruck at the amount of corruption that was being alleged.

A Presumptive Loss

On 11 November 2010, the New Indian Express published a headline with just a number – 1760000000000. The CAG report had put three estimates of presumptive loss to the exchequer by the 2G spectrum allocation. But the one which caught everyone’s imagination was the biggest number of them all. A loss of 1.76 lakh crore.

But where did this figure come from?

The fact is, this was a notional loss. Presumptive, a hypothesis, if you will. The CAG reasoned that if the 2G spectrum was allocated at 2008 rates and not 2001 rates, then the country could’ve gained Rs 1.76 lakh crore rupees. Here’s a simple analogy to understand the concept of notional loss.

Analogy: Parliament or a Luxury Hotel?

It’s like saying – the Indian Parliament functions for only 100 days in a year. What if we were to convert it into a luxury-hotel for the rest of the 256 days? Just how much money are we losing by not capitalising on prime real estate?

But Why Did the Government Not Want to Make Money?

The telecom department says it wanted the spectrum to be economically priced. It wanted to increase tele-density and not maximise revenue.

According to the government, this was a pre-planned policy decision, not an arbitrary mistake and definitely not a scam. But that’s not the only allegation that the CAG made.

There's also the question of who was allotted this spectrum, and whether they were qualified to handle a precious national resource like spectrum.

The CAG claims that the telecom minister tweaked the rules to allocate spectrum to relatively new players. The CBI claimed there was a quid pro quo to this generosity and favoritism. But the trial court ruled that there exists no convincing paper trail to prove that.

In 2012, spectrum licenses allotted by A Raja were cancelled by the Supreme Court. A re-auction was held in 2014, which earned Rs 61,162 crore

So, what were we left with ?

A paralysed bureaucracy.
A devastated telecom sector.
A disillusioned aam aadmi.

And after seven years – a reset button.