New Delhi: The current
spectrum auction has been a tremendous success. This shows us that the
2008 2G spectrum allocation by the then telecom minister A Raja was
definitely a scam. Till 6th day of the ongoing allocation, 8 February,
the government has received bids worth 56,554.92 crore and the auction
has not concluded yet.
The allocation in November–December 2012 had proved to be a
lacklustre auction of spectrum. However, current auction is a success so
far for the government despite the economy is growing much slower than
2012. The question arises that when spectrum allocation was so dreary in
2012, why is the on-going auction turning out to be successful?
The structure of the auction makes it so remarkable. This auction
is so interesting because every company wishes to acquire 900 MHz
spectrum in Delhi, Mumbai and Kolkata circles. The companies that had
spectrum licences in these circles, their licences are about to expire.
These include Vodafone, Idea and Airtel.
RelianceJio, which may commence 4G services across nation this
year, has added excitement in the competitive bidding by joining the
auction.
An important difference is that in 2012 auction UPA government
tried hard to prove that the allocation of spectrum at cheap rates was a
correct decision. UPA had come under scathing criticism due to 2G
spectrum scam.
In 2012 allocation, ‘reserve price’ of 5 MHz spectrum at an all India level was fixed at Rs. 14,000 crore. UPA had expected to raise Rs. 28,000 crore. However, only Rs. 9,704 crore had been raised and the whole auction was proved uninspiring.
The UPA government blamed the then Comptroller and Auditor General
(CAG) Vinod Rai for the dull auction. CAG had suggested conducting 3G
spectrum auction at 2010 prices. According to him, Raja had sold
spectrum at a loss of over Rs. 1,76,000 crore. The estimated loss caused much embarrassment to the government.
Congress spokesperson was joyous owing to a lacklustre auction for
he wanted Congress to get a clean slate after the 2G scam accusations.
Manish Tewari, who is now Minister of Information and Broadcasting, had
questioned CAD about the alleged Rs. 1,76,000 crore.
Kapil Sibal's 'zero loss' theory
Telecom Minister Kapil Sibal, who had advocated 2G spectrum
allocation as ‘zero loss’, i.e. no revenue loss, was also celebrating
the low-generated revenue. He contended, as there was no defined policy
in relation to the auction, so there is no question of loss.
Kapil Sibal justified auction under UPA government by saying that
they followed rules of the previous government. 2G spectrum, he said,
was allocated on ‘first come first served basis’. It was a policy of
previous NDA government he argued.
Thus, it is evident that the spectrum auction carried out in 2012
turned out to be a flop because of the then government’s vested
interests.
Now see, Sibal is saying this time that the financial position of
the government is wrong and needs a lot of revenue from spectrum
auctions. They took the bold step of reserve price rationalisation. This
helped the government to gain Rs. 40,000 crore bid on the very first day.
This proves two things, first, the auction in 2012 failed not
because the procedure was incorrect; however, because the reserve price
set by Kapil Sibal was not rational. Government deliberately did not
take a rational decision, which made auction impractical.
Second, the zero loss contention does not fare well when you are
allocating resources (spectrum) that are have scarce availability. Cost
of available resources can be increased or decreased according to the
goals of the incumbent/government. However, you will have to assess the
potential damage and will have to justify it. Thus, spectrum allocation
of 2014 proves that Kapil Sibal’s ‘zero loss’ theory is a flop.
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