The 2G spectrum scam involved politicians and government officials in India illegally undercharging mobile telephony companies for frequency allocation licenses, which they would then use to create 2G subscriptions for cell phones. The shortfall between the money collected and the money that the law mandated to be collected is estimated to be 176,645 crore (US$32.15 billion), as valued by the Comptroller and Auditor General of India based on 3G and BWA spectrum auction prices in 2010. However, the exact loss is disputed. In a chargesheet filed on 2 April 2011 by the investigating agency, Central Bureau of Investigation (CBI), the loss was pegged at 30,984.55 crore (US$5.64 billion) whereas on 19 August 2011 in a reply to CBI, Telecom Regulatory Authority of India (TRAI) said that the government gained over ₹3,000 crore (US$546 million) by giving 2G spectrum. Similarly Kapil Sibal, the Minister of Communications & IT, claimed in 2011, during a press conference, that “zero loss” was caused by distributing 2G licenses on first-come-first-served basis.
All the speculations of profit, loss and no-loss were put to rest on 2 February 2012 when the Supreme Court of India delivered judgement on a public interest litigation (PIL) which was directly related to the 2G spectrum scam. The Supreme Court declared allotment of spectrum as “unconstitutional and arbitrary” and quashed all the 122 licenses issued in 2008 during tenure of A. Raja (then minister for communications & IT) the main official accused in the 2G scam case. The court further said that A. Raja “wanted to favour some companies at the cost of the public exchequer” and “virtually gifted away important national asset.” The “zero loss theory” was further demolished on 3 August 2012 when as per the directions of the Supreme Court, Govt of India revised the base price for 5 MHz 2G spectrum auction to 14,000 crore (US$2.55 billion), which roughly gives the value of spectrum to be around 2,800 crore (US$509.6 million) per MHz that is close to the CAG’s estimate of 3,350 crore (US$609.7 million) per MHz.
The original plan for awarding licences was to follow a first-come-first-served policy to applicants. A. Raja manipulated the rules so that the first-come-first-served policy would kick in — not on the basis of who applied first for a license but who complied with the conditions. On 10 January 2008, companies were given just a few hours to provide their Letters of Intent and cheques. Those allegedly tipped off by Raja were waiting with their cheques and other documents. Some of their executives were sent to jail along with the minister.
In 2011, Time magazine listed the scam at number two on their “Top 10 Abuses of Power” list (just behind the Watergate scandal)