Subbarao's appearance in the court as a prosecution witness is significant in view of the CBI's argument that the government had sold 2G spectrum cheap by sticking to 2001 rates while granting licences in 2008 that the agency chargesheet says led to a loss of around Rs 31,000 crore. The RBI governor said that any loss figure needs to be seen in the context of a policy decision. Subbarao stated that there was a sacrifice of revenue, but a policy sometimes needs to strike a balance between a welfare objective and revenue maximization.
He said the finance ministry's view on spectrum pricing was that the price must be "rediscovered" as it would be inappropriate to give licences at the price fixed in 2001-02.
SC warns govt on auction S eeking an affidavit from the telecom secretary on the recent spectrum auction, the SC on Monday said, "Even if 0.1% of spectrum is kept back, it will not be acceptable. The Centre was required to auction all that had been cancelled. In the 1,800 MHz bandwidth, nothing could have been kept back." P 9 RBI guv: Can't say govt suffered loss
New Delhi: RBI governor D Subbaraosaid the finance ministry's "endeavour" was to maximize the government's revenues, but "since the DoThad already issued letters of intent on January 10, 2008, the effort of the ministry was to see if the price for spectrum could be enhanced to reflect the current market prices". "We also negotiated an increase in spectrum usage charges," he added.
Subbarao had told the JPC much the same recently, but his deposition in the court has an evidentiary value that can help the CBI make a case of illegal gain. The RBI governor told the court that he had written a letter on November 22, 2007 to then telecom secretary D S Mathur. "I wrote this letter to confirm if proper procedure was followed with regard to due financial diligence. I also questioned as to how the rate of Rs 1,600 crore, determined as far back as 2001, could be applied for licence given in 2007 without any indexation, let alone current valuation," he said. Finance secretary from April 2007 to September 2008, he said by June 2008, it was agreed between the telecom department and the finance ministry that only spectrum beyond startup range would be priced.
Later, during his cross-examination, Subbarao said in a meeting held on July 4, 2008, the then finance minister P Chidambaram and Raja had conveyed to the PM about the agreement between DoT and the finance ministry on pricing. On being asked whether the government had suffered any loss , Subbarao said, "There was certainly sacrifice of revenue." He later said, "It is correct that while determining policy, the government has to make a balance between welfare maximization and revenue maximization. In this case, if there was a sacrifice of some revenue, it cannot be said that the government suffered a loss."