India’s national auditor has pulled up the Narendra Modi government for violating telecom spectrum-allocation norms and use of financing outside the budget, in order to achieve deficit targets.

In its report tabled before the Parliament, the Comptroller and Auditor General (CAG), a constitutional body that audits government expenses, found that a set of microwave band spectra was allocated to a telecom operator in 2015 on a first-come-first-serve basis, in contravention to the recommendations of a committee.

This was done despite there being 101 applications and led to a loss of 5.6 billion rupees (US$79.4 million) to the exchequer, Indian Express reports.

The report also noted various shortcomings in spectrum management by the Department of Telecommunications (DoT) that led to losses to national coffers.

The CAG found that non-withdrawal of spectra from state-run firm BSNL, which it had offered to surrender to avoid a one-time charge, had caused a loss of 5.2 billion rupees ($73.73 million) to the government exchequer.

The auditor pointed out that DoT had set up a committee in December 2012 to study the allotment of spectra in various categories and proposed that the microwave-band allotment to all operators should be done via a market-related auctioning process and not a first-come-first-serve basis.

In 2012, the Supreme Court had struck down first-come-first-served policy in a 2G spectra allocation in 2008-09 and cancelled 122 telecom permits that were granted spectra via that process.

2G scam

In 2010, the CAG Vinod Rai alleged in his report that the then telecom minister A Raja allotted 2G spectrum licenses on a first-come-first-serve basis at throwaway prices. This had caused taxpayers to lose 1.76 trillion rupees (nearly $25 billion). The minister had to resign and was jailed for 15 months.

Though critics of the report had reservations about how Rai arrived at such an astronomical figure, the infamous 2G scam became engraved in the minds of the general public and deeply embarrassed the former United Progressive Alliance (UPA) government led by Dr Manmohan Singh. Political analysts said it was a major cause for the UPA’s poor showing in the 2014 general election.

However, in a strange turn of events on December 21, 2017, a CBI special court hearing the 2G scam case acquitted Raja and all the other 18 accused, saying prosecutors had failed to prove the charges. After this, the former CAG has remained tight-lipped and refused to discuss the issue in public.

Masking national debts

The CAG has also criticized the Modi government for borrowing via off-budget channels to finance capital and revenue spending in 2016-17 and masking the true extent of fiscal and revenue deficits.

In its Fiscal Responsibility and Budget Management Act Compliance Report, the CAG said the current government has underestimated its total liability by 5% and the revenue deficit by 509.99 billion rupees, Indian Express reports.

The auditor has recommended that the government should put in place a policy framework for off-budget financing, which should include disclosure to Parliament.

The CAG said the government borrowed funds from the Indian Railway Finance Corporation for railway projects, and the Power Finance Corporation for power projects. It said off-budget financing was also used to cover the deferment of fertilizer bills through special banking arrangements.

The auditor noted that these decisions were outside the scope of the budget and such off-budget financing was not part of the calculation of fiscal indicators, despite having fiscal implications.

The CAG has said that considering the understatement of liability, the government’s total liability at the end of the 2016-17 financial year was 76.69 trillion rupees, which is 50.5% of Gross Domestic Product, rather than 45.5%.