2G Scam: CAG's Rs 1.76-Lakh Crore Loss Calculation Is Debatable, Says Former RBI Governor D Subbarao

2G scam: Subbarao challenged the CAG’s methodology, noting that the estimate did not account for the positive impact of low spectrum pricing

RBI Governor Duvvuri Subbarao ( Image Source :Getty )

2G scam: A decade after the alleged telecom scandal shook the Congress-led government at the Centre, former RBI Governor Duvvuri Subbarao has contested the Comptroller and Auditor General's (CAG) estimate of a presumptive loss of Rs 1.76 lakh crore in the 2G case. In an interview with The Indian Express, Subbarao challenged the CAG’s methodology, noting that the estimate did not account for the positive impact of low spectrum pricing. He suggested a different analysis could show potential gains for the government, where the benefits surpass the revenue forfeited.

"The upfront sacrifice of revenue would be balanced out by recurring income from increased spectrum usage. Furthermore, the CAG overlooked the significant equity and efficiency gains from enhanced telecom penetration," Subbarao said.

The CAG's November 2010 report concluded that the 2G scam resulted in a staggering loss of Rs 1.76 lakh crore to the state exchequer. The CBI's charge sheet alleged a loss of Rs 30,984 crore from the allocation of 2G spectrum licenses.

Subbarao, who served as Union Finance Secretary from July 2007 to September 2008, highlighted the difficulty of quantifying the costs and benefits without making major assumptions. He opposed the Department of Telecom's (DoT) proposal to issue second-round spectrum licenses at the 2001 price, asserting a fresh auction would have revealed a more accurate price due to spectrum's increased scarcity.

Subbarao's suggestions were met with resistance from the DoT, but eventually, the decision was made to offer the spectrum at the 2001 price with future allocations to be decided via auctions.

During his testimony in a CBI court, Subbarao was asked whether he supported the government's decision to incur such a significant loss. He responded that it was misleading to classify it as a loss when it was more accurately a sacrifice of revenue for potential gains.

In December 2017, a special CBI court acquitted former telecom minister A Raja and other defendants in three separate 2G cases, citing a lack of evidence for a scam. Both the CBI and Enforcement Directorate have since appealed the decision, with the Delhi High Court admitting the CBI's appeal in March this year.

The court determined that the CBI presented a prima facie case warranting further review.