2G scam: Montek backs Sibal in trashing CAG figures

Throwing his weight behind telecom minister Kapil Sibal in trashing the Comptroller & Auditor General's estimate of the loss caused by the allegedly dirt-cheap sale of 2G spectrum in 2008 is no less an authority that Planning Commission deputy chairman Montek Singh Ahluwalia.

Ahluwalia said on Sunday that the CAG's estimate of a Rs1.76 lakh crore loss to the exchequer in the alleged scam was a "way-out unrealistic number". He also echoed Sibal's view that focusing on revenue loss would be an analytical red herring, as revenue maximisation was not the target of spectrum sale.

Earlier this month, Sibal had said the actual loss to the exchequer was nil. His comments led to a public war of words between the government and the CAG, with the opposition looking on gleefully.

In a TV interview, Ahluwalia said, "The loss of consumer benefit (if spectrum was sold at a higher price) would be 10 times the loss of revenue. Higher telecom penetration has translated into huge benefits for the rest of the economy."

Referring to the equity sale by Swan and Unitech after the firms bagged 2G spectrum, Ahluwalia said, "Swan and Unitech simply issued new equity which lowered their own equity in the companies substantially."

He said the two companies issued fresh equity to companies that bought into them and the money did not go to the promoters. "It (the money) went into new companies and it is meant to be used to roll out telecom services. They did not sell their equity. They expanded the equity of the company and brought in new people. That's not the same thing," Ahluwalia said.

However, he said (again echoing Sibal) that the CAG had rightly criticised the use of the first come, first served policy in allocating the licences. Ahluwalia said if this policy was fully implemented, it would bring in a lot of weak players who didn't have the capacity to utilise the value of the licence; and they would then induct others who would utilise the value.