CAG Vinod Rai should reconsider its loss estimate on 2G

Yusuf

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NEW DELHI: Congress leader Digvijaya Singh took a dig today at CAG Vinod Rai on the national auditor's estimate of loss to the national exchequer in the 2G spectrum allocation in 2001.

"The CAG should reconsider how far its estimate was right with regard to the report, which it had earlier given and the losses that it had computed (in spectrum allocation two years ago)," Singh said.

The remarks came a day after the much-talked about 2G spectrum auction yesterday virtually flopped, yielding just Rs 9,407 crore contrary to the high valuation estimated by the CAG in its damning report two years ago.

Singh also sought to dismiss the suggestion that the auction yielding less revenue this time is a reflection of disenchantment of telecom companies with the government.

The government was targeting a minimum of Rs 28,000 crore from the sale of 2G spectrum in the GSM band and the tepid response may upset its efforts to meet the revised fiscal deficit target of 5.3% of GDP.

Overall, the government had budget Rs 40,000 crore as revenue from spectrum sale this fiscal.

The CAG had in 2010 said the then telecom minister A Raja's decision to give away spectrum at rates fixed in 2001 had caused a presumptive loss of Rs 1.76 lakh crore to the exchequer.

Telecom minister Kapil Sibal had refused yesterday to comment on the CAG's estimation of Rs 1.76 lakh crore as the loss to the exchequer in giving away spectrum on first-come-first-serve basis in 2008.

In an apparent dig at the CAG, he had merely said, "the facts are before the nation and quite clear."

CAG Vinod Rai should reconsider its loss estimate on 2G: Digvijaya Singh - The Times of India on Mobile
 

nrj

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Govt can not absolve itself of 2g scam because of low response to auction.

Degree to which CAG's figure is realistic, is a different debate all together.

Sent via Tapatalk from a galaxy far far away
 

sayareakd

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I have myself done some auctions and people at auction have very good idea about the product sold. If some circles are unsold they should lower the reserve price and re auction.
 

Yusuf

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As I have told many times earlier, not auctioning 2G was not a scam. Selling it to undeserving people in return for favors under the older policy was the scam.
 

Daredevil

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Two reasons for the failure of the 2G auction.

1) A cartel formed by the Telecom companies to not bid at the current high reserve price

2) High reserve prices for the licenses.

The reserve price should be lowered and re-auctioned. Or give the license at this high reserve price on a first-come-first basis, till the stock lasts. No deadline and stuff like that.
 

Yusuf

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Two reasons for the failure of the 2G auction.

1) A cartel formed by the Telecom companies to not bid at the current high reserve price

2) High reserve prices for the licenses.

The reserve price should be lowered and re-auctioned. Or give the license at this high reserve price on a first-come-first basis, till the stock lasts. No deadline and stuff like that.
High reserve price guided by the alleged loss as claimed by CAG. So will you accept that CAG was wrong in its estimation?

In the field of cu throat competition, there can be no cartel. Especially when newer entrants are eager to lap up any possible opening.
 

Daredevil

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High reserve price guided by the alleged loss as claimed by CAG. So will you accept that CAG was wrong in its estimation?

In the field of cu throat competition, there can be no cartel. Especially when newer entrants are eager to lap up any possible opening.
But CAG never asked Govt. to fix a high reserve price. They should lower reserve price and re-auction spectrum. Competition will determine the price of the spectrum. Who knows at what price it will sell?.

Also take into consideration that economy is going down, therefore the Telecom companies are circumspect over the price.

When 3G auctions happened the economy was on the rise and therefore its auction garnered a lot of money for the government. I think CAG made the 3G auction figures as a basis for 2G presumptive losses. So, a lot of factors changed and therefore the CAG figures may not hold true to present circumstances.
 

Sabir

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Yousuf has made the pint. I am agreed with it. The scam was alloting it illegally to the people Raja favoured. May be there was transfer of money under the table. But when they talk about a loss of 1.76 L crore I feel surprising. Even if the government earn that much of money by auction who is going to pay that? Surely the telecom companies are not going to pay from their pocket. It will be recovered from the customers like you and me by means of higher tariff and that is within a short period before new tech comes in market. I wont mind if they distribute it free of cost following some guidelines.
 

blank_quest

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prices of spectrum should NOT be "brought down".Instead the spectrum should be "traded-as--a-commodity" on exchange among the companies by pooling all available spectrum.
 

Yusuf

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prices of spectrum should NOT be "brought down".Instead the spectrum should be "traded-as--a-commodity" on exchange among the companies by pooling all available spectrum.
You will wake up every morning wondering what your call charges will be today.
 

blank_quest

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Yousuf has made the pint. I am agreed with it. The scam was alloting it illegally to the people Raja favoured. May be there was transfer of money under the table. But when they talk about a loss of 1.76 L crore I feel surprising. Even if the government earn that much of money by auction who is going to pay that? Surely the telecom companies are not going to pay from their pocket. It will be recovered from the customers like you and me by means of higher tariff and that is within a short period before new tech comes in market. I wont mind if they distribute it free of cost following some guidelines.
The product is not sold in the market 'because of the cartel'.Better govt should sell "All-of-the-spectrum".Why govt is selling only some parts of spectrum?Why treating MTNL and BSNL differently? What /Social Service/ is State-owned telecoms doing?
 

blank_quest

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You will wake up every morning wondering what your call charges will be today.
The Reserved Spectrum that companies Hold, as THEY ONLY USE SOME PARTS OF WHAT THEY BOUGHT, stand alone ideal spectrum space (which companies keep for future usages) becomes USELESS and does a LOT of cost to the limited resource being besieged for private ends.The 'Call-Quality' will ever remain slow. I know many people will understand what is the 'Lobbying' all for these things happen for.
 

nrj

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Telecom companies will find themselves on the heap of loss if they stay away.

Govt should not lower its spectrum licence fee.

Let COAI keep dreaming about possible cartel, they don't have any pricing power in market anyways.
 

cloud_9

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CAG's number of $ 40 Billion was pure BS.........auditing 2G on the guidelines of 3G auction #NobelPrizeInEcnomics.Anyway the government had missed the window of opportunity in the past and they can't wash away from the corruption.They are trying to sell a Nokia 3310 for a price of Galaxy S2 in 2012 :rofl:


PS - For unlimited lulz read CAG's DIAL Report :laugh:
 

hit&run

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Seems like match fixed between Congress-I lead Govt. and bidders. Now congressi spin doctors can turn the argument to their favour.

I have seen such fixing in Punjab for bid of sand blocks and liquor.

Instead of bidding again reparation from companies could have been ordered by SC with some good legal or technical argument.

If Congress-I have an ounce of shame they should do a good retrospect of what they have been doing and correct themselves. Its seems like Congress-I politicians have become immortals and immune to repercussions of any crime or malpractices they are doing.
 

Sakal Gharelu Ustad

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This explains quite a bit. The Hindu : Opinion / Editorial : Lessons from a flop show

The wretched outcome of the 2G spectrum auctions, netting just Rs.9,407.64 crore against a Rs.40,000 crore revenue target, has evoked predictable reactions from the Congress party. Its leaders have indirectly mocked the Comptroller and Auditor General, the Supreme Court and the media for tying the government's hands — instead of expressing concern about the impact of the failed auctions on investor confidence and India's worrying fiscal deficit. Their gloating fails to conceal the fact that the government has messed up and badly needs scapegoats to camouflage its sins. The loss calculated by the CAG was in reference to the year 2008 when the addressable market in telecom and consequently, the revenue potential, was substantially higher than it is in 2012. India then had only 234 million mobile subscribers, translating to a 24 per cent tele density level and an addressable market of nearly 800 million. Roughly eight-nine million mobile subscribers were being added every month, hitting a scorching 20 million per month in 2008-09. In 2012, the tables turned towards negative subscriber growth as the total mobile subscriber base hit 900 million, with a tele density of 70 per cent, significantly diminishing the addressable market and making any substantial investment unwise.

Similarly, the average revenue per user (ARPU) has also dipped to Rs.97/month from Rs.316/month in 2008. With these numbers, no company can hope to build a viable greenfield business by bidding for raw spectrum. Even where money supply and capital markets are concerned, on January 8, 2008, two days before the scam, the Sensex hit a peak of 21,078 and international funding was flowing like water. Little surprise then that 575 applicants had queued up, all of whom have since fled as the UPA struggles to defend itself against charges of rampant corruption, policy paralysis and crony capitalism. Market buoyancy equally played a role in 2010 during the 3G auctions, garnering the exchequer revenues of over Rs.1 lakh crore. In short, the UPA government deliberately forsook a great opportunity in 2008 to legitimately collect large revenues, bring in serious investors and hike tele density, while keeping the sector free of litigation. India is today at a crossroads where it can either admit to past transgressions and pursue a course correction or sink further in the quicksand of denial. Any attempt to get into a blame game will only create fresh havoc — impacting all sectors of the economy, which the nation can ill afford. The government would be better served by proactively correcting a situation gone horribly wrong rather than gloating over its opaque decision making, illegal acts and complete lack of foresight in matters of public policy.
Main idea: Auctioning at two point of times, makes spectrum a different good(i.e. spectrum in 2008 is not the same as spectrum in 2012) and so same profits and hence same bidding cannot be expected.
 

sukhish

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NEW DELHI: Congress leader Digvijaya Singh took a dig today at CAG Vinod Rai on the national auditor's estimate of loss to the national exchequer in the 2G spectrum allocation in 2001.

"The CAG should reconsider how far its estimate was right with regard to the report, which it had earlier given and the losses that it had computed (in spectrum allocation two years ago)," Singh said.

The remarks came a day after the much-talked about 2G spectrum auction yesterday virtually flopped, yielding just Rs 9,407 crore contrary to the high valuation estimated by the CAG in its damning report two years ago.

Singh also sought to dismiss the suggestion that the auction yielding less revenue this time is a reflection of disenchantment of telecom companies with the government.

The government was targeting a minimum of Rs 28,000 crore from the sale of 2G spectrum in the GSM band and the tepid response may upset its efforts to meet the revised fiscal deficit target of 5.3% of GDP.

Overall, the government had budget Rs 40,000 crore as revenue from spectrum sale this fiscal.

The CAG had in 2010 said the then telecom minister A Raja's decision to give away spectrum at rates fixed in 2001 had caused a presumptive loss of Rs 1.76 lakh crore to the exchequer.

Telecom minister Kapil Sibal had refused yesterday to comment on the CAG's estimation of Rs 1.76 lakh crore as the loss to the exchequer in giving away spectrum on first-come-first-serve basis in 2008.

In an apparent dig at the CAG, he had merely said, "the facts are before the nation and quite clear."

CAG Vinod Rai should reconsider its loss estimate on 2G: Digvijaya Singh - The Times of India on Mobile
CAG is good for sensational news, obviously BJP did is not like it. no wonder this party will never come to power. bigotory can only take you so far.
 

sukhish

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Two reasons for the failure of the 2G auction.

1) A cartel formed by the Telecom companies to not bid at the current high reserve price

2) High reserve prices for the licenses.

The reserve price should be lowered and re-auctioned. Or give the license at this high reserve price on a first-come-first basis, till the stock lasts. No deadline and stuff like that.
how much is the coal scan worth for.
 

SADAKHUSH

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I am going to go off topic, Why not auction Diggi for a change and let us see how much he can bring to Government? Ever since this damn scandal came to light no one has been sentenced to this day it just shows the intent of our justice system.
 

sob

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The match was fixed by the Government as they wanted to prove a point and also to influence the ongoing case in the SC. This is my reading of the situation.

Please go through this editorial in the The Hindu, which was posted earlier by @Sakal Gharelu Ustad.

Further I was hearing Mr.Rajan Mathai of COAI, explain hw this whole auction was designed to flop, by the Government. According to him there were so mnay things mixd up by the Government in the auction that nobody wanted to touch it.
 
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