Financial Frauds in India
The 2G scam
Aniruddh Narsimhan - P35114
Disha - P35125
Manu Vatayan – P35149
Mrinalini - P35152
Svethal Bhasin - P35188
2G spectrum scam took place in India in late 2000’s which involved politicians and government officials who tried illegal undercharging mobile telephone companies for frequency allocation licenses, which they would then use to create 2G spectrum subscriptions for mobiles. The entire process of allocation of UAS licences lacked transparency and was undertaken in an arbitrary, unfair and inequitable manner. The Hon'ble Prime Minister had stressed on the need for a fair and transparent allocation of spectrum.
Let us understand the ...view middle of the document...
In India, the radio frequencies are confined between 9 KHz and 400 GHz.
Spectrum can be classified according to its width. Spectrum Range is as follows: -
Cable TV | 145-860MHz |
2G | 800-1900MHz |
3G | 2100MHz |
4G, broadband internet | 2300M |
So, we first send the data from Ahmedabad to a Satellite hovering in the sky, and from there, send the data to Mumbai. Now we face a problem:
Problem Number 1:
First satellite which would be super expensive so private player (Businessman) cannot afford it.
But here comes the Government it helps in launching the satellite using ISRO. Thus the spectrum, which was needed for businessmen, is created. Then Government will charge money to whosoever (cell phone company) uses this spectrum.
Now a businessman wants to launch his own mobile service (like Vodafone, Airtel etc). Therefore he is interested in using this 2G highway, to transport his data packets. He can also use 3G or 4G, which provide faster data transfer, but they’re more expensive.
Problem Number 2: Things needed to access Spectrum
Problem (businessman’s side) | Solution |
1. Driver’s License (to operate the truck) | Apply to Department of Telecom. |
1. Pay rent/toll for using this highway (spectrum). Just like people pay for using Bandra-Worli sea-link or Yamuna Expressway. | Get loan from SBI. Pay the money to Government. Or even better, bribe minister so they give free spectrum. |
Since highways have fixed capacity. So government cannot give license to 500000 businessmen else, it’ll create traffic jam. So, From Government’s side what should be the “ideal” solution?
Check the application of people who are applying for the service: does he have previous experience of running telecom business.
After verifying his record, sell the access to this Spectrum.
Problem Number 3:
How should Government sell access to this Spectrum?
Two methods, 1) First Come First Serve 2) Auction.
Both have their advantages and problems.
You already know how cinema tickets are sold. The person, who is first in the line, gets the ticket. If you come late, you don’t get the ticket. This also leads to ticket black-marketing, for example, I come early, buy all the tickets. You come late, all the tickets are sold, I offer my tickets to you at higher price and make huge profit. This is not good for economy because I’m making money without producing any new goods/services which will lead to inflation. But according to a theory propounded by Mr.Sibal, this is “zero loss” because cinema hall did receive money for ticket sale. So it’s not like Cinema-hall making losses!
Anyways, for common people:
Buying ticket is not crime but buying ticket but not watching movie and selling that ticket to third person higher price crime.
Method#2: Auctioning method
As the name suggest, auction the tickets. If person A offers Rs.200 for a seat and Person B offers Rs. 500 for the same seat, then sell the ticket to Person B.