The recent 2G-controversy and the related debate over the role of the PAC as opposed to the JPC also raises a broader Issue regarding the general scrutiny of government finances by Parliament. Oversight of the government’s finances involves the scrutiny of the government’s financial proposals and policies. The Indian Constitution vests this power with the Parliament by providing that (a) taxes cannot be imposed or collected without the authority of law, and (b) expenditure cannot be incurred without the authorisation of the legislature. The Indian Parliament exercises financial oversight over the government budget in two stages: (1) at the time of presentation of the annual budget, and (2) reviewing the government’s budget implementation efforts through the year. The Parliament scrutinises the annual budget (a) on the floor of the House, and (b) by the departmentally related standing committees. Scrutiny on the floor of the House The main scrutiny of the budget in the Lok Sabha takes place through: (a) General discussion and voting: The general discussion on the Budget is held on a day subsequent to the presentation of the Budget by the Finance Minister. Discussion at this stage is confined to the general examination of the Budget and policies of taxation expressed during the budget speech. (b) Discussion on Demand for Grants: The general discussion is followed by a discussion on the Demand for Grants of different ministries. A certain number of days or hours are allocated for the discussion of all the demands. However, not all the demands are discussed within the allotted number of days. The remaining undiscussed demands are disposed of by the Speaker after the agreement of the House. This process is known as the ‘Guillotine’. Figure 1 shows the number of Demands discussed and guillotined over the last five years. It shows that nearly 90% of the Demands are not discussed every year. 
Some Important Budget Documents Annual Financial Statement – Statement of the estimated receipts and expenditure of the government. Demand for Grants –Expenditure required to be voted by the Lok Sabha. A separate Demand is required to be presented for each department of the government. Supplementary Demand for Grants – Presented when (a) authorized amounts are insufficient, or (b) need for additional expenditure has arisen. Finance Bill – Details the imposition of taxes, the rates of taxation, and its regulation. Detailed Demand for Grants – Prepared on the basis of the Demand for Grants. These show further break-up of objects by expenditure, and also actual expenditure in the previous year. For more details see detailed note on Financial Oversight by Parliament here.
TRAI released its recommendations on auction of spectrum on April 23, 2012. The recommendations are in pursuance of the Supreme Court order cancelling 122 telecom licences. The cancellation was ordered on grounds of procedural irregularities and arbitrariness in the first-cum-first-serve policy for allocation of spectrum. The recommendations, if adopted by the Department of Telecommunications, would change various aspects of the present telecom policy, including (a) relationship between a telecom licence and spectrum; (b) procedure for allocation of spectrum; (c) pricing of spectrum; (d) limits on spectrum allocation; and (e) use of spectrum. Relationship between telecom licences and spectrum Previously, under the Telecom Policy 1994 (updated in 1999), spectrum was tied in with telecom licences. Since 2003, licence conditions provided for award of two blocks of 6.2 MHz of spectrum for GSM technology and two blocks of 5 MHz for CDMA technology. As per the government’s decision of January 17, 2008 (as explained in TRAI's consultation paper, see page 3 paragraph 7) additional spectrum would be awarded on the basis of increment in the number of subscribers. Service providers had to pay a licence fee (on obtaining the licence), an annual licence fee and a spectrum usage charge determined on the basis of their adjusted gross revenue. TRAI has recommended that telecom licences and spectrum should be de-linked. The service provider would thus pay separately for the value of the licence and the spectrum. With this formulation an entity that does not hold a licence, but is eligible to secure one, may also procure spectrum. This would help in avoiding situations where licence holders have to wait to secure spectrum or offer wire line services in the absence of spectrum. Procedure for allocation of spectrum TRAI has recommended that spectrum be auctioned by means of a simultaneous multiple round ascending auction (SMRA). This means that the service providers would bid for spectrum in different blocks simultaneously. In the first round of auction a reserve price (base price) set by the government is used. Reserve price for auction and payment mechanism A reserve price indicates the minimum amount the bidder must pay to win the object. In case it is too low, it may reduce the gains made by the seller and lead to a sub-optimal sale. If it is too high, it may reduce the number of bidders and the probability of the good not being sold. Various countries have adopted a reserve price of 0.5 times the final price. TRAI has recommended that the reserve price should be 0.8 times the expected winning bid. It has also recommended that telecom companies pay 67% to 75% of the final price in installments over 10 years, depending on the spectrum band. TRAI has reasoned that a higher price would reduce the possibility of further sales upon bidders securing spectrum. However, this may lead to fewer bidders and ultimately fewer service providers. It is argued in news reports that this may increase investments to be made by the service providers and eventually an increase in tariffs. Spectrum blocks and caps TRAI has recommended that the spectrum cap should be determined on the basis of market share. A service provider can now secure a maximum of 50% of spectrum assigned in each band in each service area. However, a service provider cannot hold more than 25% of the total spectrum assigned in all the bands across the country. As per the January 2008 decision, additional spectrum could be awarded to telecom companies when they reached incremental slabs of subscribers. This could extend to two blocks of 1 MHz for GSM technology, and two blocks of 1.25 MHz for CDMA, for each slab of subscribers. TRAI has recommended that spectrum should be auctioned in blocks of 1.25 MHz. Each auction would at least offer 5 MHz of spectrum at a time. Smaller blocks would ensure that service providers who are nearing the spectrum cap may secure spectrum without exceeding the cap. However, experts have argued that 1.25 MHz block may be too limited for launching services. Also, TRAI in the recommendation has noted that a minimum of 5 MHz of contiguous spectrum is required to launch efficient services with new technologies. Use of spectrum TRAI has recommended that the use of spectrum should be liberalised. This implies that spectrum should be technology neutral. Telecom companies would now be free to launch services with any technology of their choice.
