Brave new world: no place to hide

The 2G auction was a flop. Who says so, and more importantly, for whom? Certainly not a flop for economic rationality, or for the identification of the true culprits behind the 2G scam. In 2001, licences for the 2G auction (4.4 MHz) yielded Rs 1,660 crore; the equivalent auction revenue for 5 MHz would have been Rs 1,900 crore. (See Nripendra Misra, former chairman of TRAI, "An auction that did not flop", Business Standard, November 25). The CAG alleged, the Supreme Court agreed, and Arvind Kejriwal followed the lack of an auction for 2G in 2008 enabled a large dose of corruption whose magnitude was Rs 1.76 lakh crore that is, the revenue loss was almost 100 times that of the "successful" auction held in 2001.

In years gone by, the government or auditors could allege whatever and would be believed. Complete information was lacking, there was no internet and therefore no ability to conduct research in a timely fashion, and institutions (like the CAG) were respected because the presumption was that not only did the institutions know better, but that they must know better. Something like Caesar's wife, who should not only not be suspect, but be seen to be above suspicion.

What has not been generally been recognised, especially by the "ruling" generation, is that in this brave new world there is no place to hide one's fallibilities. One simple and crude calculation of the worth of the 2001 2G licence in 2008 would have been the 2001 revenue, adjusted upward by the growth in nominal per capita income. The latter includes both the effects of inflation and real income growth, that is, a first stop calculation of increase in nominal purchasing power. This calculation would imply a 121 per cent increase; Rs 1,900 crore in 2001 would be Rs 4,200 crore in 2008. The equivalent number for 2012 (per capita income levels of Rs 21,850, 47,508 and 79,990 in the three years 2001, 2008, and 2012) would be Rs 7,000 crore. The final realised auction revenue in 2012, according to Misra was Rs 6,994 crore!

... contd.

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