29-01-2013, 12:49 PM
The 2G Spectrum Scam
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INTRODUCTION
The 2G spectrum scam involved politicians and government officials in India illegally undercharging mobile telephony companies for frequency allocation licenses, which they would then use to create 2G subscriptions for cell phones. The shortfall between the money collected and the money which the law mandated to be collected is estimated to be 176,645 crore (US$33.39 billion), as valued by the Comptroller and Auditor General of India based on 3G and BWA spectrum auction prices in 2010.[1] However, the exact loss is disputed. In a chargesheet filed on 2 April 2011 by the investigating agency, Central Bureau of Investigation (CBI), the loss was pegged at 30,984.55 crore (US$5.86 billion)[2] whereas on 19 August 2011 in a reply to CBI, Telecom Regulatory Authority of India (TRAI) said that the govt gained over 3,000 crore (US$567 million) by giving 2G Spectrum.[2] Similarly KapilSibal, the Minister of communications & IT, claimed in 2011, during a press conference, that "zero loss" was caused by distributing 2G licenses on first-come-first-served basis.[3]
All the speculations of profit, loss and no-loss were put to rest on 2 February 2012 when the Supreme Court of India delivered judgement on a public interest litigation (PIL) which was directly related to the 2G spectrum scam. The Supreme Court declared allotment of spectrum as "unconstitutional and arbitrary," and quashed all the 122 licenses issued in 2008 during tenure of A. Raja(then minister for communications & IT) the main official accused in the 2G scam case.[4] The court further said that A. Raja "wanted to favour some companies at the cost of the public exchequer" and "virtually gifted away important national asset."[5] The "zero loss theory" was further demolished[6] on 3 August 2012 when as per the directions of the Supreme Court, Govt of India revised the base price for 5 MHz 2G spectrum auction to 14,000 crore (US$2.65 billion), which roughly gives the value of spectrum to be around 2,800 crore (US$529.2 million) per MHz that is close to the CAG's estimate of 3,350 crore (US$633.15 million) per MHz.[7][8]
Background
India is divided into 22 telecom zones, with a total of 281 zonal licenses in the market.[13] According to the telecom policy of India, when a licence is allotted to an operator, some start-up spectrum is bundled along with it.[14] The policy does not have a provision for auctioning the spectrum.[15] In 2008, 122 new second generation (2G) Unified Access Service (UAS) licenses were given to telecom companies at the 2001 price and on a first-come-first-serve basis. As per the chargesheet filed by the Central Bureau of Investigation (CBI), several rules were violated and bribes were paid to favour certain firms while awarding 2G spectrum licenses. The audit report of Comptroller and Auditor General of India (CAG) says that several licenses were issued to firms with no prior experience in the telecom sector or were ineligible or had suppressed relevant facts.[16] In November 2007 Prime Minister of India DrManmohan Singh had written a letter to telecom minister A.
Chronology of events and investigation
The Centre for Public Interest Litigation filed the first petition against the Union of India for irregularities in awarding 2G spectrum licenses. The petition alleged that the government had lost $15.53 billion by issuing spectrum in 2008 based on 2001 prices, and by not following a competitive bidding process. This led to further petitions and the launch of a probe in 2010.[88]
[attachment=48717]
INTRODUCTION
The 2G spectrum scam involved politicians and government officials in India illegally undercharging mobile telephony companies for frequency allocation licenses, which they would then use to create 2G subscriptions for cell phones. The shortfall between the money collected and the money which the law mandated to be collected is estimated to be 176,645 crore (US$33.39 billion), as valued by the Comptroller and Auditor General of India based on 3G and BWA spectrum auction prices in 2010.[1] However, the exact loss is disputed. In a chargesheet filed on 2 April 2011 by the investigating agency, Central Bureau of Investigation (CBI), the loss was pegged at 30,984.55 crore (US$5.86 billion)[2] whereas on 19 August 2011 in a reply to CBI, Telecom Regulatory Authority of India (TRAI) said that the govt gained over 3,000 crore (US$567 million) by giving 2G Spectrum.[2] Similarly KapilSibal, the Minister of communications & IT, claimed in 2011, during a press conference, that "zero loss" was caused by distributing 2G licenses on first-come-first-served basis.[3]
All the speculations of profit, loss and no-loss were put to rest on 2 February 2012 when the Supreme Court of India delivered judgement on a public interest litigation (PIL) which was directly related to the 2G spectrum scam. The Supreme Court declared allotment of spectrum as "unconstitutional and arbitrary," and quashed all the 122 licenses issued in 2008 during tenure of A. Raja(then minister for communications & IT) the main official accused in the 2G scam case.[4] The court further said that A. Raja "wanted to favour some companies at the cost of the public exchequer" and "virtually gifted away important national asset."[5] The "zero loss theory" was further demolished[6] on 3 August 2012 when as per the directions of the Supreme Court, Govt of India revised the base price for 5 MHz 2G spectrum auction to 14,000 crore (US$2.65 billion), which roughly gives the value of spectrum to be around 2,800 crore (US$529.2 million) per MHz that is close to the CAG's estimate of 3,350 crore (US$633.15 million) per MHz.[7][8]
Background
India is divided into 22 telecom zones, with a total of 281 zonal licenses in the market.[13] According to the telecom policy of India, when a licence is allotted to an operator, some start-up spectrum is bundled along with it.[14] The policy does not have a provision for auctioning the spectrum.[15] In 2008, 122 new second generation (2G) Unified Access Service (UAS) licenses were given to telecom companies at the 2001 price and on a first-come-first-serve basis. As per the chargesheet filed by the Central Bureau of Investigation (CBI), several rules were violated and bribes were paid to favour certain firms while awarding 2G spectrum licenses. The audit report of Comptroller and Auditor General of India (CAG) says that several licenses were issued to firms with no prior experience in the telecom sector or were ineligible or had suppressed relevant facts.[16] In November 2007 Prime Minister of India DrManmohan Singh had written a letter to telecom minister A.
Chronology of events and investigation
The Centre for Public Interest Litigation filed the first petition against the Union of India for irregularities in awarding 2G spectrum licenses. The petition alleged that the government had lost $15.53 billion by issuing spectrum in 2008 based on 2001 prices, and by not following a competitive bidding process. This led to further petitions and the launch of a probe in 2010.[88]