India Downplays 2G Licenses Scam

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The Indian government on Friday attempted to downplay an alleged scam in the allocation of 2G licenses, by claiming that there had been no actual losses to the country.

There had been presumptive losses as well in the allocation of 2G licenses by previous governments, when the opposition was in government, but these were designed to encourage the growth of telecommunications in the country, Kapil Sibal, India's Minister for Communications and IT told reporters at a televised press conference in Delhi on Friday.

The opposition Bharatiya Janata Party (BJP) and some other parties ran a coalition government from 1999 to 2004 when some decisions regarding spectrum and licenses allocation were taken.

His government had followed the policies of the previous government, Sibal said.

India's Comptroller and Auditor General of India (CAG) alleged in a report presented to Parliament in November that the irregular allocations of 2G licenses and spectrum in 2008 to some operators in India cost the country about US$39 billion.

The report said that A. Raja, the minister of communications and IT at the time, had favored some companies by awarding them licenses at bargain-basement prices. The correct value of 2G spectrum should have been arrived at by an open market process like an auction, CAG said.

Raja resigned ahead of the presentation of the report, after leaks of it were published in some newspapers in India.

The opposition parties disrupted Parliament in November and December, demanding a joint parliamentary probe into the alleged scam.

The CAG's estimate of the loss to the exchequer is "utterly erroneous," Sibal said.

Sibal however agreed with the CAG that "prima facie" there was something wrong in the procedure adopted to allocate 2G spectrum, though he did not go into details.

There had been presumptive losses to the exchequer previously as a result of changes in the allocation and pricing policy for 2G licenses, when the opposition was in government, Sibal said.

The previous government had laid out a spectrum policy that was promotional in nature, with revenue considerations being secondary, and that was the policy observed by his government as well, Sibal added.

India's Central Bureau of Investigation (CBI) is investigating the alleged scam under the direction of the country's Supreme Court.

The CBI and the government have however extended the scope of the investigation to include licenses awarded since 2001. The government appointed in December a retired Supreme Court judge to examine the allocation of mobile licenses and spectrum from 2001, following charges that irregularities in allocation preceded the tenure of A. Raja as minister of communications and IT.

The scrutiny of allocation of licenses and spectrum from 2001 may also help the current government deflect opposition criticism of corruption in the communications ministry.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is

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