2G scam: No public loss to exchequer, says Kapil Sibal

Excerpts from India Tonight on CNBC-TV18 Watch the full show » RELATED NEWS 2G scam: CAG's Rs 176000cr figure erroneous says Sibal

Last week, Telecom Minister Kapil Sibal in a press conference declared that the astounding figure of Rs 1,76,000 crore-the loss according to the CAG report that the 2G license issue had-is sensational and 'utterly erroneous. "These figures are on alleged losses and have no basis," he pointed out.

Karan Thapar caught up with Telecom Minister Kapil Sibal to talk to him about various issues.

Here is a verbatim transcript of the exclusive interview with Kapil Sibal on CNBC-TV18. Also watch the accompanying videos.

Q: You have said that the CAG claim that the loss to the exchequer as a result of 2G spectrum sale could be perhaps as much as 1.76 lakh crore is utterly erroneous and without any basis. You also said the logic underlying this estimate is completely fraud. On what basis do you make that point?

A: We have given some arithmetic calculations that he has calculated the price of 3G with reference to 2G or rather than a price of 2G with reference to 3G. Beyond 6.2 megahertz has been calculated by him which the government is yet to decide.

Q: So you are saying that the methodology is wrong therefore the conclusion is wrong?

A: There are two things. One, in policies of this nature what we need to do is maximise public welfare and not maximise revenue, that's the underlying philosophy of the 10th Plan.

Q: So the government wasn't seeking to maximise revenue. It wanted to spread tele density?

A: That is exactly what we wanted to do; spread tele density, ensure that there is money in the pocket of the consumer, that the cost of telephony is much less for the consumer, there is greater competition in the market, the cost of having a mobile phone is less. All these objectives are for public welfare. Ultimately remember this, technology is not for revenue earning, technology must reach people and reach people at a cost that helps in their welfare.

Q: And you are saying that incoming to an estimate that the loss could be as much as Rs 1.76 lakh crore, the CAG has overlooked these issues?

A: Absolutely. He has overlooked the policy framework of the 10th document, which is what was been followed. Second is the issue of methodology which I have explained in mathematical terms.

Q: At your press conference on Friday the 7th, you said first that the realistic figure for the loss was something slightly over Rs 17,500 crore, but in the very next breath you said there was no loss at all. Which is it, a loss or no loss?

A: You can calculate losses without reference of benefit. In a balance sheet what happens, there is a cost and there is a benefit. In every policy framework there is a cost and there is a benefit. If you look at the benefits to the consumer, they far exceed the revenue loss.

Q: So what is your position? Is there a loss or not?

A: My position is if you don't take the benefits you can calculate the losses to any extent you want. But if you look at the benefits, there are no losses.

Q: So that is your position if you look at the benefit to the consumer, there is no loss to the public exchequer. I am getting you to clarify this because it's so important. You are saying if you look at the benefit to the consumer, there is no loss whatsoever to the public exchequer?

A: Absolutely. Let me just extrapolate this a bit. There are three public goods that need to be served through any public policy, right, especially in a commercial area like this. Number one, benefit to the consumer, second, benefit to exchequer and three, the larger social good, in other words the policy of transparency to make sure that the industry is competitive.

So, industrial competitiveness, benefit to the consumer and benefit to the exchequer. If you look at all these three and all these three should lead to public good. In other words you cannot benefit the consumer so much that you destroy the industry; you cannot benefit the exchequer so much that you destroy the consumer.

Q: I just want to reiterate and repeat, your position is that there is no public loss to the exchequer.

A: Absolutely. If you look at it in cost benefit terms, there is no public loss.

Q: If there is no public loss to the exchequer, how do you explain and account for the fact that companies like Swan & Unitech made windfall profits allegedly to the extent of USD 2 billion within weeks of getting the spectrum and without starting operations?

A: Remember, when disinvestment took place in the NDA time and Centaur Hotel was sold and within a month or so it was sold for Rs 30 crore more.

Q: Do you remember the criticism Mr Shourie and BJP faced for that.

A: Whatever. So, therefore, these are economic perspectives that companies have when they enter into arrangements of buying equity into a company. These are long-term perspectives.