Petty politics, small hurrahs
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Parliament's winter session is almost certainly going to provide occasion to revisit the 2G spectrum scam that has assumed a new salience following the fiasco of the latest round of auction bids in lieu of the 122 licences revoked from the 2008 spectrum allocation. The CAG had triggered much controversy initially by mentioning four sets of presumptive or notional losses based on as many assumptions. Of these, the figure of Rs 1.76 lakh crore topped the list, the others falling in descending order to a third or less of the former figure.
The highest presumptive figure was instantly and emphatically endorsed by the media and political opponents as the actual "loss", making a mountain out of what was possibly no more than a molehill, if that. It is true that there was no market-price discovery and that the allotted price was fixed on an earlier calculus. Further, the first-come-first-served deadline was shifted to benefit favoured candidates, while some inexperienced players among those who were allocated spectrum sold out to others at a handsome profit before rolling out any services, thus suggesting that their interest was merely speculative. However, A. Raja has been arraigned on these counts.
The furore in Parliament ventilated by the media with its own added hype was carried into the streets. Further CAG calculations of loss in other sectors, such as "Coalgate", aggravated a creeping paralysis of decision-making, impacting governance and the investment climate more broadly. Compelled to unscramble the spectrum omelette and under judicial orders to go in for auction as the best means of price discovery, the government went ahead, only to net a little over 25 per cent of the expected Rs 40,000 crore from the spectrum sale.
Rather than show some contrition over the falsification of its arguments of the earlier estimate of monumental loss of Rs 1.76 lakh crore based on the CAG's "presumptive" calculations, the critics now accuse the government of "celebrating failure" so as to be able to cock a snook at them. Heads I win, tails, you lose, it is! It is being said that 2012 is not 2008. Between then and now, telephone density has increased from 300 to 900 million subscribers while call rates have declined by over 33 per cent with fierce competition from more players. Thus the market was near-saturated, especially in certain popular telecom circles with limited scope for large, quick expansion, and it was unreal to fix an excessive reserve price. All this wisdom, as on the last occasion, seems to have come in hindsight. Yes, it seems everybody knew the new auction bids would come a cropper but were too polite or too busy to mention it until after the event. This is as nice a piece of humbug as one has come across in a highly competitive humbug market.