Nation

2G case: Who pays a bribe through a cheque?

While media pundits, a CAG, political leaders and the CBI wanted people to believe 2G allocation was a scam, the controversy left the common man baffled 

Photo courtesy: Twitter
Photo courtesy: Twitter A Raja and Kanimozhi

Issues and ‘real issues’ raised in noisy TV debates and newspapers these days often leave laymen like me completely baffled. I was of course disappointed at the CBI special court acquitting so many powerful people accused in the 2G case. It was disappointing because what is more pleasurable and edifying than to see those who lord over us, politicians and bureaucrats, having their nose rubbed in the dust and marched to prison?

But what were the issues? I could make out only three.

  • LOSS: In business a loss occurs when one is unable to recover the cost. A trader purchases something for Rs.8 but if he sells it for Rs. 7, hesuffers a loss of Rs.1. On the other hand, if he sells it for Rs.10, obviously he makes a profit of Rupees two. If he sells it for Rs. 9 instead of Rs.10, his profit is reduced to Rupee one. Thus, there is a loss of profit of Rs.1. But by no accounting norm is it a loss. In case of 2G, it is nobody’s case that there has been a loss. The complaint is that if instead of selling it at a fixed price, the spectrum wereauctioned, the Government would have earned an additional revenue of Rs, 1,76,000 crores more. There are many questions about the computation—the CAG report itself mentioned many figures, but whatever the figure, the grievance is not about any loss but about “loss of possible profit”, which is something very different from loss.

At this stage it is worth recalling that 2G spectrums are used for mobile telephony. And the charges levied by mobile operators for such calls are approved by the Regulator, TRAI. Obviously, they take into account the cost of the operators while fixing such rates. Thus, if the Mobile operators paid Rs. 1,76,000 crores more for the spectrum, the mobile call rates would have been higher to that extent.

The Government, however, chose to sacrifice its own revenue for the sake of lower call rates. Whether the choice was economically right or not may be questioned. But making a choice between welfare maximisation and revenue maximisation is a sovereign function of any Government.

Selling rice at a cheaper rate to the BPL population, which entails a real loss rather than a loss of profit, is also questioned by many economists. But nobody has suggested that this is a crime or a morally reprehensible choice made by the Government or that it is a ‘scam’.

  • FIRST COME, FIRST SERVED: The second issue is adoption of “first come first served” basis to select the buyers of spectrum. Whenever something is sold on fixed price basis and the supply is limited and less than the demand, only two methods are available to the seller.

When due to a transport strike or some other bottleneck supplies dry up, petrol pumps or ration shops sell till stocks last and then down their shutters. A classic case of first come first served. Or, one adopts a lottery Housing Boards or Development authorities do while allocating ready-made flats. Adoption of fist come first served basis is, therefore, by itself unexceptionable.

  • BRIBE: The third issue is one of bribe. A company gives a loan of Rs. 200 crores to a TV channel by cheque. If the lender were not a recipient of 2G license, or if the channel were not owned by family members of M. Karunanidhi, no one would probably have given it a second thought.

A cheque automatically enters the book of Accounts of a borrower as a liability to be discharged at a later date. This could not possibly have been intended to be a bribe. Who pays bribes through cheques? Moreover, the very idea that a Rs176 thousand Crore scam generated a bribe of Rs200 crores is laughable.

This, to a layman like me, is what the 2G ‘scam’ looked like. The case shows what an irresponsible media and authorities trying to play to the galleries in conjunction can do.

(The author, a former CEO of a company, is a keen observer of current affairs)

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