Government blames CAG for poor 2G show, to hold another round

New Delhi : Smarting under the poor response to the 2G auction, the government Friday said it would try to sell spectrum in circles where there were no bidders by the end of this fiscal.

Communications Minister Kapil Sibal said an empowered group of ministers (EGoM) headed by Finance Minister P. Chidambaram would meet soon to decide on the price and date for the auction in circles such as Delhi and Mumbai.

With Chidambaram and Information and Broadcasting Minister Manish Tewari by his side, Sibal addressed a media conference just days ahead of parliament’s winter session and rejected opposition allegations that the government was “celebrating” the auction failure, and claimed that some Rs.40,000 crore could still be garnered form the sale of radio waves.

Sibal also sought to shift the blame on the Comptroller and Auditor General for the dismal show and “sensationalism” over the auditor’s presumptive loss figure of Rs.1.76 lakh crore.

“Where are those Rs.1.76 lakh crore?” he asked, adding “government getting revenue cannot be the sole criterion” for policy.

“You cannot extrapolate figures and sensationalize them and destroy the hen that laid the golden egg… Sensationalism took over and government was limited in its policy prescriptions which has resulted in what we saw a few days ago,” said Sibal.

Sibal said the government got more than Rs.1 lakh crore from the auction of 3G spectrum, which was used by the CAG to base its presumptive loss. “But the customer got nothing” as there was no roll-out of 3G services.

The government had set a reserve price of Rs.14,000 crore for pan-India spectrum on the basis of CAG’s assumption of Rs.1.76 lakh crore loss caused to the exchequer in the previous sale in 2008. It managed a meagre Rs.9,407.64 crore in the auction that lasted barely two days.

“The telecom story is no longer a story that we can talk about to the rest of the world,” said Sibal. “People ask me the question, what happened? And quite frankly, I have no answers.”

“All I can say is that certain events took place and there was a level of sensationalism that took over and the government was, in a sense, limited in its policy prescriptions and had to move forward in a certain way which ultimately has resulted in what we have seen couple of days ago.”

Finance Minister P. Chidambram said the auction that ended Wednesday was not a success or a failure as the process had not been completed yet.

“The auction process is incomplete. There are four more GSM circles, CDMA, reframing… there will be more auctions before March.”

Chidambaram said that there would be substantial net gains to the government after the process was over and one-time spectrum fees were adjusted.

But the main opposition Bharatiya Janata Party would take none of this and said the government had “mismanaged” the telecom sector.

“The failure of the 2G spectrum auction is an example of the direction in which this government was taking the country’s economy to,” said senior leader Arun Jaitley.

Former finance minister Yashwant Sinha said the government’s policies were responsible for the low bidding.

“They (UPA government) first destroyed the telecom sector, a sector which is the real success story of economic liberalisation in India….Having destroyed the market and the sector, how would you expect that people would come forward and bid the amounts that you are expecting.”