2G Auction : Failure or Success?
IT is only seldom that a govt. may be happy on the failure of its act or policy. The govt. has a reason to joy as the auction fetched only Rs. 9,407 crore against the expected 40,000 crore in the auction of 2G spectrum held on Nov. 14. Now the govt. can rebuke the CAG and repeat that no scam has taken place. As usual, let me admit that the system is powerful enough to justify its wrong doings, particularly when advocates like Sibals, Manish Tiwaris etc. represent it. But the issue has several points.
1. CBI, the biggest saviour of UPA has, in Supreme Court admitted to a scam of Rs. 30,000 crore. CAG never claimed the scam of Rs. 1,76,000 crore. It gave several figures ranging from Rs. 50,000 crore to Rs. 1,76,000 crore.
2. THE auction was planned in a way to discourage new entrants. The auction was for only 1.2MHz while an operator requires at least 10MHz to operate properly. (THE Supreme Court had already said that whole of spectrum must be auctioned.) The bidders has no trust in the govt. that it will not increase the stakes during subsequent biddings.
3. IN 2008, three largest international telecom companies approach the Minister (A. Raja) to request for open auction, that was denied. Therefore, while in 2008, there were more than 400 bidders, this time, they could be counted on fingers.
4. FOREIGN investors also stayed away as the present govt. has lost their trust.
IN 2008, the Operators earned a profit of Rs. 300/- per user per month that has been reduced to Rs. 95/- per month. Investing a large amount without clear expected returns dissuaded the investors. The investors had pointed out, already that the amount of bidding with a minimum base price of Rs. 14,000 was unrealistic.
5. INDIAN investors had already invested in 3G auction. They were not left with much money, Besides, the Banks had no expectation from them. So, they were not ready to help them out.
6. IN 2008, the teledensity was about 23% that has grown to about 76%. Obviously, making new subscribers is much more difficult now than it was in 2008.
THEREFORE, it is clear that the govt. wanted this auction to go this way and it has succeeded. But, there is a dilemma in the government. On the one hand it is bent on proving CAG wrong, and on the other hand, wants to curtail its fiscal deficit through the auction of 2G. What the government finally opts for is yet to be seen.
1. CBI, the biggest saviour of UPA has, in Supreme Court admitted to a scam of Rs. 30,000 crore. CAG never claimed the scam of Rs. 1,76,000 crore. It gave several figures ranging from Rs. 50,000 crore to Rs. 1,76,000 crore.
2. THE auction was planned in a way to discourage new entrants. The auction was for only 1.2MHz while an operator requires at least 10MHz to operate properly. (THE Supreme Court had already said that whole of spectrum must be auctioned.) The bidders has no trust in the govt. that it will not increase the stakes during subsequent biddings.
3. IN 2008, three largest international telecom companies approach the Minister (A. Raja) to request for open auction, that was denied. Therefore, while in 2008, there were more than 400 bidders, this time, they could be counted on fingers.
4. FOREIGN investors also stayed away as the present govt. has lost their trust.
IN 2008, the Operators earned a profit of Rs. 300/- per user per month that has been reduced to Rs. 95/- per month. Investing a large amount without clear expected returns dissuaded the investors. The investors had pointed out, already that the amount of bidding with a minimum base price of Rs. 14,000 was unrealistic.
5. INDIAN investors had already invested in 3G auction. They were not left with much money, Besides, the Banks had no expectation from them. So, they were not ready to help them out.
6. IN 2008, the teledensity was about 23% that has grown to about 76%. Obviously, making new subscribers is much more difficult now than it was in 2008.
THEREFORE, it is clear that the govt. wanted this auction to go this way and it has succeeded. But, there is a dilemma in the government. On the one hand it is bent on proving CAG wrong, and on the other hand, wants to curtail its fiscal deficit through the auction of 2G. What the government finally opts for is yet to be seen.
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