Though one may hold Mr A Raja accountable for procedural lapses in issuing 2G licences, the Comptroller and Auditor General’s (CAG’s) estimate of a Rs 1.7-lakh-crore loss to the exchequer is questionable. If this was the case, there would have been an additional investment of a similar amount by the industry, which, in turn, would have imposed an annual servicing cost (at 12 per cent of investment) of Rs 21,000 crore. Compare this to the profit after tax of Rs 8,200 crore for the nine National Stock Exchange-listed mobile companies last year. It is noteworthy that barring Bharti Airtel and Idea Cellular, there is nothing to write home about profits made by others — the public sector units, MTNL and BSNL between them incurred a loss exceeding Rs 5,000 crore in 2009-10. So, high spectrum cost, as suggested by the CAG, would have either wiped out all the new entrants, leaving the field only to a couple of players, or required a higher tariff.
Low spectrum cost and, consequently, low tariff have led to the explosive growth of mobile phones in the country. Therefore, there is a need to examine the manner in which the loss of Rs 1.7 lakh crore was arrived at. It seems highly exaggerated since the industry does not have the capacity to absorb it.
C S Jacob, Mumbai
