- Know the Facts
ViS a VIS Kapil sibal's utter lies
PRESS RELEASE. 10TH JANUARY 2011
I am astonished and pained by the statement of Shri. Kabil Sibal that CAG Estimate of 2G loss is utterly erroneous. The CAG report on 2G spectrum in Chapter 5 has explained in detail the methodology adopted by them to calculate the “Presumptive losses”. The report repeatedly emphasis that the correct value of 2G Spectrum could have been determined by a market driven process.” However, in the instant case, in the absence of a market driven process they have taken three instances to indicate how the prices for spectrum has been totally undervalued.
One such case is the offer by a company by Name S TEL Limited, in September 2007 itself to pay “additional revenue share of Rs 6,000 crore to the DOT “over and above the spectrum charge /revenue share policy. The company in its communication dated 27th Dec 2007 enhanced its earlier offer to Rs 13,752 crores with an offer “to increase the bid price in the event of any counter bid for auction of spectrum. Based on this methodology, the CAG calculated the presumptive loss as 65,909 crores as against Rs 12,386 crores collected by DOT.
It is the customary practice in business transaction to take the first offer as the base price and to try to improve further upon it to reap the maximum advantage. The CAG report has taken this offer of S TEL as an indicative price and calculated the presumptive loss. Shri. Kabil Sibal except for his generalization of criticizing the methodology by CAG has not pointed out specifically how this methodology used by the CAG is wrong. The second methodology used by CAG is the recommendation by TRAI submitted to Govt.in Sept 2006 for a price of Rs Rs 1010 core for one block of 2X5 MHz 3G spectrum.
The Empowered Group of Ministers (EGoM) recommended a price of Rs 3,500 crores for the same. The Govt reaped Rs 1.03 lakh crores against its own estimation of Rs 35, 000 crores from the open auction of 3G spectrum.
In this background of market value for 3G spectrum, and the 2G spectrum actually offering 2.75G services, the CAG taking other factors like the growth of the economy, the scarcity of spectrum, the growth of tele density etc has arrived the total loss as Rs 1,39,352 crores for all the services of 2G put together. Can Mr. Sibal explain how the methodology used is not correct instead of mere generalization.
The third method adopted by CAG is the huge foreign Equity brought in by three new entrants and by another four companies after the allotment of 2G spectrum. The companies by resale of the spectrum allotted to it made huge profits and sneaked away. Taking into account the total foreign equity brought in and on the volume of income brought in by 3G Auction the CAG assessed the loss as Rs 1,76,645 cores to the Government.
The statement by Shri. Kabil Sibal that application of the price of 3G Spectrum to 2G spectrums is erroneous will not stand to reason. For the CAG has pointed to the DOT even before presenting their report to Parliament the methodology adopted by them to assess the loss in revenue. And the report states:
“Audit reiterates that specific value of 2G spectrum could have been discovered only through an efficient market drawn process and in its absence, these are the indicators available which give the hints towards the loss the Government could have suffered.” While the CAG has clearly stated the circumstances under which the available indicators are taken for assessing the loss to the Govt., Shri. Sibal should have explained how this methodology is “utterly erroneous” and what should have been the alternative parameters.
It is very audacious for a constitutional functionary Shri. Kabil Sibal, an eminent lawyer by himself find fault with another constitutional authority viz., the CAG and that too openly when the whole issue of 2G spectrum allocation is under the Supreme Court Scanner and the PAC has also initiated the proceedings in the matter. It is ridiculous to note the statement of the Minister that by offering spectrum at 2001 prices the people have benefitted by lower tariff. By the same analogy will the Minister or his cabinet colleagues come forward to supply food articles at 2001 prices so that the people will be benefitted?
It is needles to point out that the CAG derives his Duties and Powers from Article 148 to 151 in Chapter V of Part V of the Constitution of India, and the CAG’s (DPC) Act 1971 made under the provisions of the Constitution. There are well written guiding principles for Audit & Accounts and there are Manuals of Standing Orders which deals with principals and procedures of Audit and preparation of Audit Reports for the Parliament and state legislatures. It would have been more appropriate for a person of standing like Shri. Sibal to point out specifically which guiding principles of audit the CAG has violated in stating the “presumptive loss” to the Government. Under the above circumstances, the statement of Shri. Sibal clearly exposes his desperate attempt to protect their political ally and nothing else and in doing so he has grossly exceeded his constitutional limits. The stand of Shri. Sibal on the issue clearly reiterates the need for a Joint Parliamentary Committee which could bring out the entire truth in the matter.
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