Kapil Sibal on 2G Spectrum Issues

Union Minister of Communications & IT, Shri Kapil Sibal said on 2G Spectrum issues:
“The report of the Comptroller and Auditor General (CAG) on the 2G Spectrum Issue has criticized certain aspects of the decision making process related to Spectrum allocation. One of the criticisms relates to an alleged large loss to the national exchequer in the allocation of 2G spectrum. Others related to the process of implementing the first come first served policy.

“The criticism of large revenue loss has received a great deal of attention in the Press because of the size of the loss stated by CAG. This estimate is based on the assumption that spectrum should have been auctioned or sold in some other manner which would have fetched the Government the highest possible price. However, the logic underlying this estimate is completely flawed. Government policy is formulated with a view to maximize public welfare, and note merely to maximize Government revenues. The pricing of different natural resources is often done in a manner that meets this objective. For instance, land is given free of cost to infrastructure projects such as construction of highways, coal prices are kept much lower than global prices in order to ensure that the cost of power remains reasonable; fertilizer prices involve significant subsidy as do the prices of wheat, rice, kerosene oil, etc. supplied through the Public Distribution System. In all these cases if the objective of the Government were only to maximize revenues, much higher price would be charged, but there are good reasons why that is not done.

“The rationale of the pricing decision for 2G must be seen in the background of the Telecom Policy as it has evolved over many years.