How the CAG figure for “undue benefit” to Mukesh Ambani’s Reliance Jio shrank

The Rs 19,000 crore mystery: How the CAG figure for “undue benefit” to Mukesh Ambani’s Reliance Jio shrank


In a report that was tabled in Parliament on 8 May 2015, the Comptroller and Auditor General (CAG) of India indicted the Department of Telecommunications (DoT) for providing an “undue benefit” to Reliance Jio—a telecom company owned by Mukesh Ambani as part of Reliance Industries Limited (RIL)—by allowing Jio to offer voice services under the Broadband Wireless Access (BWA) spectrum. According to the report, the cost of this “undue benefit” was Rs 3,367 crore. However in a draft report that had been released by the CAG in August 2014, the figure for the undue benefit was Rs 22,842 crore.

In its draft report, the CAG was highly critical of the government for allowing Reliance Jio to use Infotel Broadband Services Private Limited (IBSPL) as a front company to acquire broadband spectrum. IBSPL was, at that time, a tiny internet service provider promoted by Anant Nahata—the son of Mahendra Nahata, who is the promotor of Himachal Futuristic Comunications Limited (HFCL), a manufacturer of telecom products and a provider of telecommunication services. Interestingly, HFCL came into the limelight in 2011, when it was alleged that Datacom, a company owned jointly by Videocon and HFCL, had been one of the prime beneficiaries in the allotment of 2G spectrum during the reign of A Raja as the telecom minister. Earlier, in 1995, Mahendra Nahata had bid for nine 2G licences and had to be “bailed out” by the then Communications Minister Sukh Ram. The CAG draft report had further claimed that Reliance Jio had acquired the spectrum exploiting loopholes left by the DoT while framing rules for the auction of 4G broadband wireless access (BWA) spectrum. The company then allegedly wangled permission to provide mobile telephone services on this spectrum.

The final report of the CAG that was presented on 8 May, however, has diluted this criticism considerably. It has deleted important references in the draft report to the alleged “rigging” of the auction by two “colluding” parties: Reliance and Infotel.

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