The 2G spectrum loss is a scam colluded by politicians and government officials under the Indian National Congress (Congress) coalition government. The Union Government of that time is accused that it undercharged mobile telephone companies for frequency allocation licenses, which they used to create 2G spectrum subscriptions for cell phones. The Government chose NM Rothschild & Sons to design a first-of-its-kind e-auction mechanism in the world, a US$2.27 billion landmark deal.
The difference between the money collected and that mandated to be collected was estimated by the Comptroller and Auditor General of India at ₹1.76 trillion (US$27 billion), based on 2010 3G and BWA spectrum-auction prices. In a charge sheet filed on 2 April 2011 by the Central Bureau of Investigation (CBI), the loss was pegged at ₹309,845.5 million (US$4.8 billion). In a 19 August 2011 reply to the CBI, the Telecom Regulatory Authority of India (TRAI) said that the government had gained over ₹30 billion (US$470 million) by selling 2G spectrum.
On 2 February 2012, the Supreme Court of India ruled on a public interest litigation (PIL) related to the 2G spectrum allocation. The court declared the allotment of the spectrum “unconstitutional and arbitrary”, cancelling the 122 licenses issued in 2008 under A. Raja (Minister of Communications & IT from 2007 to 2009), the primary official accused. According to the court, Raja “wanted to favour some companies at the cost of the public exchequer” & “virtually gifted away important national asset[s].
The zero-loss theory was discreditedon 3 August 2012 when, after a Supreme Court directive, the Government of India revised the base price for 5-MHz 2G spectrum auctions to ₹140 billion (US$2.2 billion), raising its value to about ₹28 billion (US$440 million) per MHz (near the Comptroller and Auditor General estimate of ₹33.5 billion (US$520 million) per MHz).
Although the policy for awarding licences was first-come, first-served, which was introduced during Atal Bihari Vajpayee Government, the rules so it applied to compliance with conditions instead of the application itself. On 10 January 2008, companies were given only a few hours to supply Letters of Intent and payments; some executives were allegedly tipped off by Raja, and they (and the minister) were imprisoned.
According to some analysts, many corruption scandals including 2G spectrum loss, coal mining scam, Adarsh Housing Society scam and Commonwealth Games scam were major factors behind Congress-led UPA government’s massive defeat in 2014 Lok Sabha election. The corruption charges were so heavy that Congress couldn’t get over from that and thus eventual loss of trust from the party and its leaders