2G Verdict Puts Spotlight on CAG's Revolving Door of Notional Loss

A review of the national auditor's calculation of presumptive loss in other sectors shows that it usually offers multiple figures and often revises its estimates downwards.

All those accused in the 2G scam were acquitted by the CBI court on Thursday. Credit: PTI

New Delhi: The special CBI court’s judgement in the controversial 2G spectrum scam on Thursday has once again thrown a spotlight on India’s national auditor, an institution that has generally been held in high esteem due to its perceived impartiality and incisive reports.

And yet, a review of how the Comptroller and Auditor General of India has examined presumptive and notional loss in various sectors and industries shows that it offers multiple scenarios and in some cases has revised its estimates downwards months after its initial report has been made public. 

For instance, in the controversial 2007-2008 spectrum sale, the CAG calculated notional loss to the exchequer under “first come, first served” policy at Rs 1.76 crore. This is the figure that stuck in the public sphere, giving new momentum to the BJP’s camapaign against corruption within the UPA -II government.

However, what is not mentioned that often is that the first draft report of April 20, 2010, prepared by CAG’s lead 2G auditor RP Singh, had put the loss at Rs 48,374 crore. Later, it was said in the final report that loss could be anywhere between Rs 57,666 crore and Rs 1.76 lakh crore.

Eventually, the CBI revised down this presumptive loss to Rs 22,000 crore when it filed the chargesheet in the 2G case

Former Comptroller and Auditor General Vinod Rai. Credit: PTI

Coal revision too

As in the case of 2G, the CAG had revised several times its notional loss figures in coal block allocation case too.

In May 2012, a leaked draft CAG report on allocation of captive coal blocks caused a political storm with its conclusion that the national exchequer had suffered loss to the tune of Rs 10 lakh crore due to allotment of coal blocks to public and private sector companies without auction. It was nothing short of a political bombshell. At the time, the BJP latched onto the news report to corner the government in parliament. It disrupted parliament proceedings to put pressure on the government.

But in a dramatic turn,  the CAG softened its stand and brought down the notional loss by several times to Rs 1.86 lakh crore. It excluded blocks given to public sector companies on the ground that profits earned from coal would return to the government in the form of dividend.

On similar lines, the national auditor had initially estimated loss to the exchequer from diversion of excess coal from mines allocated to Reliance Power for Sasan and Tilaiya ultra mega power projects at Rs 1.80 lakh crore, which it finally reduced to Rs 24,000 crore.

The government had allocated Moher, Moher-Amlori extension and Chatrasal captive coal blocks to the Sasan UMPP of Reliance Power. These blocks were estimated to have nine million tonne a year of excess coal. The Empowered Group of Ministers (EGoM) on UMPPs used its discretionary powers in 2008 to permit the developer to divert the surplus coal to its nearby Chitrangi power project in the absence of policy guidelines.

The panel also accorded in-principle approval to Reliance Power for use of excess coal from Tilaiya UMPP mines but formal permission was not immediately granted to the company.

The CAG later created a big controversy by saying in a draft audit report that the decision resulted in windfall gain of R 1.20 lakh crore to the private developer, a figure that it later revised down.

The EGoM had to seek opinion from the then attorney general  Goolam Essaji Vahanvati to defuse the controversy arising from CAG’s presumptive loss theory.

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