The Ideological Implications of the 2G Acquittal

On the 2G case, the CBI Trial Court’s acquittal of the 2G accused has not been fully understood – not even the implications, let alone the judgment itself. There are three kinds of view on the acquittal. First, that it is a badge of honour for the UPA. Second, it was a conspiracy by vested interests who operated through the CAG (And the CAG chief has since then been rewarded by the NDA government). Third, there was criminal misconduct and enough evidence to demonstrate criminality, but the CBI Trial Court judgment is fatally flawed or incompetent. I don’t want to comment on the validity of these views directly. I argue that we have missed out on two key aspects: the constitutional and the ideological, and that is my focus here.

On the constitutional aspect, I refer specifically to the fundamental right, Article 14, and state directive principle 39 (b). In both of these clauses, it is clear that allocation of natural resources, of which spectrum is one, is to be used for public good, and historically public good has meant social welfare like increasing access and achieving developmental objectives. Thus, on the concept of ‘ loss’ proposed by CAG – even if it is true in the technical sense (i.e. auctions at a higher reserve price would have fetched much more revenue), it is not necessarily true that it violated the spirit of the Constitution. I have commented elsewhere with more emphasis on the Constitutional aspects.

The second implication is an ideological one. There are three ‘pillars’ on which the 2G case stands (I’m ignoring the more technical violations for the sake of argument). The first was that there was discrimination in who got access to spectrum (irrespective of whatever amount it was priced). The point was that only some were allowed even inside while others could not. The second is that the price of the spectrum, roughly speaking, were at parity with 2001-03 prices, whereas in 2008 they would have been much higher. I want to add a third, that is not commonly discussed, and which strictly speaking does not concern government but rather the beneficiaries who won spectrum at 2001 prices. These companies then sold stake to another buyer who in fact paid a much higher price for the share-holding in the beneficiary company (for example, Etisalat investing in Swan Telecom). Thus, indicating that spectrum was purchased cheap at 2001 prices and (indirectly) sold, in the form of company stakes, at 2008 prices.

On the matter of discriminatory allocation – prima facie it seems that the government is guilty of discrimination. It is not about the flouting of rule but the outcome of the flouting – money that should have reached the government treasury never did reach it. The extra revenue earned on spectrum was eaten up by middle men. On the question of whether spectrum should have been awarded at ‘2008 prices’, it is an executive decision and A.Raja is in his right to award it any price. Even TRAI can only recommend in this matter. A.Raja and indeed the UPA can and have argued that the price was low because the policy objective was about increasing access (and this is why my previous constitutional implication assumes significance).

The third issue is the most interesting because it is dialectically linked to the two previous accusations. After all, the companies sold shares because the ‘market’ clearly thought the spectrum was worth much more than what the government thought. The government priced low in the name of development, while the market didn’t think so. Now we have a strange situation. Is the government right or is the market right? In a sense, both are right in their own ways – Government because it can say we never wanted a profit and thus never bothered about discovering the market price. And the market because it pays what it thinks is the price decided by competition and opportunity in the market – so it is an objective reality and thus already ‘right’ in the positivist sense. It would be tricky to go back to the government and say, now that the market has discovered a different price, the government is retrospectively wrong about its price.

The only clue that the government did not really have welfare in mind was its behaviour in future auctions. In 2010, the 3G spectrum was allocated through auction and crores were deposited in the treasury – bailing out several ministries – heaven send for a government on the cusp of a financial crisis. If the government insists on its pricing linked to welfare policy, then why change it for the 3G auctions in 2010? But this is more of a rhetorical than a legal question. It only implies that by 2008, government was fully aware of the full (market) value of the spectrum.

Why is all this important? Because in a purely practical sense, the matter of the 2G case will be referred to the High Court. If the HC pays closer attention to the Supreme Court judgment then perhaps it will take a tougher stance on the UPA and/or the beneficiaries. In a broader sense, the 2G case anchors and makes explicit an ideological shift. The sole interpretation of public good in terms of alienation of natural resources is framed as revenue maximisation. The older interpretation of public good as welfare or social development is no longer valid. This is what we have missed during the entire 2G saga. In a nutshell, the market value of spectrum has replaced the social value of spectrum. The malfeasance of the UPA government, even though it can hide behind the fig leaf of technical legality for the time being, has legitimised those who insist on market value being the sole arbiter of public good or public interest.


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Ram Bhat Written by:

Ram is a co-founder of media and arts collective Maraa (

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