2g Spectrum Scam Of Rs.1.76-lakh Crore
2g Spectrum Scam Of Rs.1.76-lakh Crore

The 2G spectrum financial scandal in the Telecommunications and IT Ministry under A.Raja is considered one of the largest political corruption case in history of modern India.

According to the CBI the scam worth 200,000,000,000 is mainly due to loss from under pricing to the Government of India. The telecom bandwidth was being undervalued and offered to a chosen few with vested interests, on a dubious 'First-Come-First-Served' basis. It is alleged that it should have been put under a transparent auction system, advised by higher offices (PMO). However several other political parties claim that the scam's value is much higher, Arun Jaitley of BJP claimed that scam's worth is around Rs. 1,70,000 crores. The Controller and Auditor General holds A. Raja personally responsible for the sale of 2G spectrum at 2001 rates in 2008, resulting the previously mentioned loss of up to Rs. 1.70 lakh crores to the national exchequer.

The financial scam eventually led to Raja's resignation on 14th of November, 2010. There will be further criminal investigation and action on A. Raja with reports being filed by the Comptroller and Auditor General (CAG) and the Central Bureau of Investigation (CBI).

Here is a background on the 2G spectrum controversy

The issue dates to 2008 when nine telecom companies were issued scarce airwaves and licenses for second generation (2G) mobile phone services at Rs.1,658 crore (less that $350 million) for a pan-India operation. As many as 122 circle-wise licences were issued.

The opposition said that by giving the airwaves cheap, that too in the controversial manner of first-cum-first-served basis, the exchequer had lost billions of dollars. The cut-off date for applications was also arbitrarily advanced.

Later, based on the auction of airwaves for third generation (3G)  services, which got nearly $15 billion to the exchequer, and that for  broadband access, which fetched over $8.5 billion, the notional loss was estimated at $38 billion to the exchequer.
But Prime Minister Manmohan Singh himself defended Raja’s decision and said May 24 that all that his communications minister had done was to implement a policy already in place and none of the norms were flouted.

The opposition further stepped up its attack with two examples on 2G auction:
- A new player, Swan Telecom, bought licences for 13 circles with the  necessary spectrum for $340 million but managed to sell a 45-percent  stake in the company to UAE's Etisalat for $900 million. This swelled its valuation to $2 billion without a single subscriber.

- Another new player, Unitech, paid $365 million as licence fee but sold  a 60-percent stake to Norway's Talenor for $1.36 billion, taking its  valuation to nearly $2 billion, again without a single subscriber.

Similarly, another licensor, Datacom, later became Videocon Mobile and Stel now has large stake by Baharian Telecom. The other companies are Tata Tele, Idea Cellular, Loop Telecom, Shyam Telelink and Spice.

In October 2010, the Supreme Court asked the solicitor general why the prime minister had not responded to the representation by the opposition to sanction proceedings against Raja.

The final blow came after the Comptroller and Auditor General of India said the entire process of spectrum allocation was undertaken in an arbitrary manner and that the advice of the industry watchdog was ignored and misused.