RBI Governor D Subbarao said has said that the government's decision to issue 2G telecom licences at less than market price to increase tele-density does not involve financial loss. He told this to the Joint Parliamentary Committee on 2G issue yesterday. Dr. Subbarao, who appeared before the JPC as former Finance Secretary, also said that he does not agree with the controversial Finance Ministry note which suggests that Finance Minister P Chidambaram could have insisted on auctioning the 2G spectrum. He said, there could be loss due to procedure followed in issuance of licences. However, the pecuniary loss depends on what assumption one makes.
While conceding that revenue maximisation and welfare maximisation were two different things, Dr Subbarao told the JPC that if the government decides to allocate licences at a particular price, then it is a legitimate decision and does not involve loss.
Dr Subbarao was the Finance Secretary between April 30, 2007 and September 4, 2008.