CAG report raps Finance Ministry

The CAG held former telecom minister A Raja responsible on many fronts for violating guidelines, indulging in favouritism and costing the government Rs 1.76 lakh crore by mishandling the allocation of the licence. Taking note of the fact that the prime minister, minister of law and justice, finance secretary, telecom secretary and member (finance) of  DoT did not favour licence allotment without spectrum prices revision, the CAG said the finance ministry should have insisted for a Cabinet decision in view of issues involving financial implications.

The CAG’s observation that the finance ministry should have insisted for a Cabinet decision over 2G Spectrum pricing came up as it explained the sequence of events showing how Raja was not open to the idea of discussing issues at appropriate levels even when there was a high risk of huge loss to exchequer. However, the finance minister had suggested to treat issue of licences as “a closed chapter” and recommended that the price of spectrum be arrived at through an auction process just days after DoT hastily awarded 121 licences on January 10, 2008. The issue of licence was also overlooking concerns of the finance ministry and the finance wing of DoT on continuance of entry fee fixed in 2001.

But, giving hints that this was not enough and the finance ministry should have insisted for a Cabinet decision on revision of spectrum pricing, the CAG said: “The government had long been aware that spectrum was a scarce natural resource which needed to be priced appropriately so as to ensure its optimal utilisation.

“The entire chronology of events and manner in which it was handled…suggest that DoT acted in haste while issuing new UAS licences at a price discovered seven years back, which deprived it of an opportunity to discover the economic value of a scarce natural resource,” the CAG noted.

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