1.76 lakh crore and other fictions

For those interested, here is the full text of the CBI special court’s judgment in the case of CBI vs A Raja and Ors. It is a lot to read and unpack, particularly if you want (as I do) to go back in time and check out the original reporting/statements at each point, on each issue and allegation.

There is also a lot of commentary surrounding the verdict; people are also exhuming cautionary articles from the past and going ‘I told you so’. I have, as time permits, been collecting these and will do a roundup soon. For now, though, on a day of many meetings, I’ll leave you with two pieces.

#1. An excerpt from Vinod Rai’s book, Not Just An Accountant, where he attempts to justify his notional 1.76 lakh crore figure.

#2. A piece by Shekhar Gupta where he talks of the harm caused by intemperate calculations of various scams, and why none of these scams will ever result in judgments in the courts. A relevant clip, from a piece you need to read in its entirety:

So here I am again. Rs 1.76 lakh crore, the popularly peddled and believed size of the 2G scam in 2007 was 4.41 per cent of India’s GDP. It was a couple of billion dollars more than twice our entire defence budget for that year.

….

The reason is simple. When the CAG offered different figures of notional loss in 2G spectrum, from Rs 57,000 crore to Rs 1.76 lakh crore, everybody, from Modi to almost all of the media, jumped for the highest amount. The media has been slowly getting off that kerb. But the BJP is stuck. With every round of spectrum release, it faces the same embarrassing challenge, to justify its Rs 1.76 lakh crore loss fallacy as new auctions yield no more than a fraction of that. That’s why the shyness in freeing up more spectrum, a textbook case of shooting yourself in the foot. It was a touching speech a couple of years ago when speaking at a CAG event, Arun Jaitley cautioned it against exaggeration and drew the line between activism and sensationalism.

The argument here is simple: Once the BJP latched on to the 1.76 crore figure and rode it for all its political worth, it inadvertently established a benchmark, to which it remains shackled now that it is in power. Thus, in the 2015 auction (full details here), the government realized a total of Rs 1,09,874 crore (less than the 1.76 crore notional loss touted for the earlier auction, so does this mean the government undersold?), and 11% of the available spectrum remained unsold because the government, held captive to the ‘scam’ figure it had propagated when in opposition, was forced to set the base price too high.

The story repeated in 2016. Only 40% of the available spectrum was bought at auction; only Rs 65,789 crore was realized. . In other words, a valuable resource that could materially speed up the information superhighway remains unsold because the government of the day is forced to live with the valuation it touted to “prove” a scam. And, over two auctions spread over two years, the government has not yet raised the figure it had claimed, when in opposition, the previous government could have realized.

The only outcome? As Gupta argues in his piece:

India’s telecom growth has been held to ransom by that mythology and the BJP government will spend embarrassing months dismounting that tiger.

Maybe it will manage a clean dismount. Maybe not. How, though, do you calculate the enormous damage done in the interim, just so a party could win an election? What is the “notional value” of that scam?

But never mind all that: Remember Judge Loya? Remember the Caravan story that first threw his mysterious death into the spotlight?

Here is the follow-up, and it is equally scary.