If there was sacrifice of some revenue, it can’t be said govt suffered a loss: Subbarao on 2G allocation

Reserve Bank of India Governor D Subbarao on Monday told the special court trying the 2G spectrum allocation cases that there was "sacrifice of revenue" when the telecom and the finance ministries, in June 2008, agreed that start-up spectrum would not be charged and only spectrum beyond start-up would be charged for the issuance of the 122 new universal access & service (UAS) licences.

"It is correct that while determining policy, the government has to make a balance between welfare maximisation and revenue maximisation. In this case if there was a sacrifice of some revenue, it cannot be said that the government suffered a loss," Subbarao, who was the finance secretary from April 2007 to September 2008, said during his cross examination by Advocate Sushil Bajaj on behalf of accused Sanjay Chandra. He also told the court of Special Judge OP Saini that the entry fee and spectrum pricing were matter of constant discussions between the Department of Telecommunications (DoT) and the Department of Economic Affairs (DEA) between 2003 to 2008.

"The finance ministry had in 2005 said that that auction may not be appropriate and hybrid option is most appropriate" said Subbarao. However, he clarified that this position was changed after numerous discussions between the two ministries.

The RBI Governor further stated that the finance ministry had negotiated increase in spectrum usage charges, and had initially argued that the entire spectrum including start-up spectrum should be charged. However, this position was changed during discussions with the DoT. "DoT had told us that charging for the entire spectrum would be problematic and legally questionable on a number of grounds," said Subbarao. He said that finance minister P Chidambaram and former telecom minister A Raja had met Prime Minister Manmohan Singh in July 2008 and had informed him about the agreement to not charge fee for start-up spectrum.

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