RBI Governor D Subbarao said has said that the government's decision to issue 2G telecom licences at less than market price to increase tele-density does not involve financial loss. He told this to the Joint Parliamentary Committee on 2G issue yesterday. Dr. Subbarao, who appeared before the JPC as former Finance Secretary, also said that he does not agree with the controversial Finance Ministry note which suggests that Finance Minister P Chidambaram could have insisted on auctioning the 2G spectrum. He said, there could be loss due to procedure followed in issuance of licences. However, the pecuniary loss depends on what assumption one makes.
While conceding that revenue maximisation and welfare maximisation were two different things, Dr Subbarao told the JPC that if the government decides to allocate licences at a particular price, then it is a legitimate decision and does not involve loss.
Dr Subbarao was the Finance Secretary between April 30, 2007 and September 4, 2008.

The Supreme Court today directed the Government to complete fresh auction of cancelled 122 2G spectrum licences by January 11, 2013. The Apex Court said that failure to meet the deadline would invite "contempt" action against erring officials with exemplary cost.

A bench of justices G S Singhvi and K S Radhakrishnan,which extended the August 31, 2012 deadline for completing the auction process, made it clear that no court in the country will entertain any plea on this issue of 2G spectrum.

It said existing licencees of the 2G spectrum, who had to shut down the operation by September 7, are entitled to operate upto January 18 next year.

The bench, which expressed its displeasure against the Centre for not mentioning the "outer limit" for completing the auction process, said that unless the outer limit will be fixed the auction process will never happen.

The judges, who were unhappy with the affidavit filed by the Telecom Secretary R Chandrashekhar, for not mentioning the outer limit for the fresh auction of 2G spectrum, said that the process cannot go for indefinite period.

The Supreme Court today said it will consider extending its August 31 deadline given to complete the process of fresh auctioning of 2G spectrum cancelled licenses only if government gives an undertaking that its judgement would be implemented. 

In an application filed by the Telecom Ministry, the government said it needed time till November 12 to start the auction and another 40 days to complete the procedure and allocate licenses and spectrum. The application said that the entire exercise would be completed in three months and 23 days. The court had earlier extended its original June 2 deadline to August 31, 2012, refusing to grant 400 days to the government to complete the process of fresh auctioning.

It had also said the existing licenses for the 2G spectrum will continue to be operational till September 7,2012. The apex court in February had cancelled 122 licences for the 2G spectrum and had directed their fresh auctioning by June 

An Empowered Group of Ministers (EGoM), headed by Finance Minister Pranab Mukherjee, will discuss the base price of spectrum, to be auctioned to operators, in its next meeting.

Financial Services Secretary D K Mittal told reporters in New Delhi, that Spectrum pricing will come at the next EGoM, for which the date has not been scheduled yet. AIR correspondent reports the high-powered panel is likely to meet later this month.

The EGoM in its previous meeting had finalised the broad modalities for auction of spectrum, including schedule and quantum of airwaves to be sold. It, however, put off decision on pricing of spectrum for auction, which was necessitated after the Supreme Court cancelled 122 2G licences, given in 2008 by the then telecom minister A Raja.

The apex court had asked the government to auction the spectrum by August 31.

Telecom regulator TRAI today defended the steep minimum price for auction of 2G spectrum. It said that the technology has undergone a sea change since 2008 and assured that consumers would not be affected much as they will have to pay a maximum of five paisa extra per call.

Appearing before Joint Parliamentary Committee, JPC, Telecom Regulatory Authority of India chief Rahul Khullar and his predecessor J S Sarma are learnt to have defended the recommendation to auction 2G spectrum at a base price of 3,622 crore rupees for a megahertz of spectrum at pan-India level which is around 10 times higher than the price for 2G licences in 2008. The recommendation was made when Sarma was heading TRAI.

On the issue of its impact on the consumers, TRAI officials said since the licences are valid for 20 years, it will have a cumulative effect of three to four paisa per minute on calls. They said the maximum effect will be five paisa per call and consumers won't be affected much due to the high prices recommended by it. TRAI's recommended base price is almost 10 times higher than the price at which 2G licences bundled with 4.4 MHz spectrum were allocated in 2008 by then Telecom Minister A Raja.



Declaring the allocation of 2G spectrum in 2008 illegal, the Supreme Court had in February this year cancelled all 122 telecom licences allotted on first-come-first served basis to 11 companies during the tenure of Raja as Telecom Minister. Following the order, the government had asked TRAI to recommend fresh 2G pricing based on auction.

The Supreme Court today refused to grant 400 days to the government to complete the process of fresh auctioning of the 2G spectrum licences but extended the deadline for it from June 2 to August 31, 2012. A Bench of Justices G S Singvhi and K S Radhakrishnan said, the existing licences for 2G spectrum will continue to be operational till September 7, 2012. The Bench further said, its February 2 order cancelling 122 licences, allocated during the tenure of A Raja, will remain operational. The Bench was hearing the Centre's application, seeking clarification of its direction in the February 2, 2012 judgement which had fixed June 2 as the deadline, when the 122 licenses for 2G spectrum, issued in 2008, would stand quashed.

he advantage of seeking a presidential reference is that once the President writes to the Chief Justice of India, he will set-up a special constitution bench comprising at least five judges to decide upon questions raised by the government.

he government says cancellation of 2G licences by the Supreme Court last month did not have any material impact on public sector banks. Minister of State for Finance Namo Narain Meena said in a written reply to the Lok Sabha today that the cancelled licences represent certain circle or areas only. The Supreme Court cancelled One hundred twenty two 2G spectrum licences granted by former telecom minister A.Raja on the ground that they were issued in a totally arbitrary and unconstitutional manner. 

Mr. Meena said that government is closely monitoring the financial impact of the order of the Supreme Court on the banking sector in general and Public sector banks, PSB in particular. PSBs have sanctioned loans aggregating 18,571.24 crore rupees to nine companies affected by 2G verdic