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As the so called 2G case continues
to engage national attention, a matter that continues to be
sidestepped is whether there was indeed a presumptive loss of
$39-billion to the exchequer due to allocation of spectrum, a
scarce natural resource, to mobile telephone companies, rather
than through an auction, as made out by India's official auditor.
The reality lies elsewhere. The role of telecom minister A. Raja
is being probed on this matter and the courts are hearing the case
as well. There is also no doubt that official coffers may have
been fuller if spectrum was, indeed, auctioned. But was that
desired?
There are several reasons behind this line of argument --
stretching from level playing field in the telecom industry, to
the role of executive and its authority over policy matters. Then,
there is also the issue of what is the intended design of a
policy.
The current second generation (2G) spectrum case involves the
allotment of spectrum, not to the existing players but to new
aspirants. Therefore, the level playing field would have certainly
been uneven if exorbitant prices were to be charged to the new
players.
Existing players, some of them big names today in the world of
business, were allotted licences without any payment of fee
towards spectrum. As Raja himself put it, revision of entry fee
the second time around would have been discriminatory, arbitrary
and capricious.
That was also what was communicated in response when some
reservations were raised in a letter to Raja written Nov 2, 2007
by Prime Minister Manmohan Singh where he wanted to know if
revision in entry fee for new players and a transparent auction
was possible.
Clearly, the Central Bureau of Investigation (CBI) had doubts if
Raja and his policies were transparent, and not manipulative, like
the decision to advance the cut-off date for new players and
based, on its probe, it not only took him into custody but also
filed charges against him and 13 others.
If there was even a minor mala fide intent on the minister's part,
the court will pronouncece its judgment based on the evidence at
hand.
That still does not take the debate away from the basic point,
even though one has today the luxury of hindsight: whether
spectrum could still have been auctioned or was it okay to award
it for free.
A decade ago, when Sukh Ram was at the helm in the telecom
ministry, some players made some crazily-inflated bids for
licences. The process also got mired in courts and the proces
derailed telecom growth. But that part of history is conveniently
forgotten.
In the present case, apart from the argument over level playing
field with allotment of spectrum versus discriminatory action if
this resource were auctioned, there is also this larger question:
Should the people of India not benefit from the telecom
revolution?
Few can deny that the main reason why a mobile phone today has
become an indispensable tool even for people in the lower end of
India's income spectrum is affordability. The decision to give
spectrum cheap forced competition and call rates dropped like
never before, making it perhaps one of the cheapest call rates in
the world.
This, with cheaper handsets, led to India adding 500 million
mobile phone connections between 2006 and now, taking the base to
around 900 million today. Compare it to the three million mobile
phones that were there in 2001! And studies in the past have
articulated well on how jump in tele-density adds to overall
growth and prosperity.
In these were the reasons why the government of the day decided to
allow allocation of spectrum rather than an auction of this
resource. One can still debate on its merits, but not with an
accusing finger of scandal or a scam born out of mala fide
intentions.
The scam, if any, lies in the manner in which the policy was
executed, which is being tried in courts. The scam does not lie in
the policymaking, in the fact that the government decided to allot
spectrum to new players based on the same cost charged to earlier
operators.
In this light, the presumptive losses to the exchequer estimated
by the Comptroller and Auditor General of India (CAG) is faulty
for two reasons: One, to assume an auction was the right choice.
Two, to retrospectively extrapolate a price arrived two years
later.
Certainly, two wrongs cannot make a right. But in this case, the
first wrong -- that spectrum should have been auctioned and not
allotted -- is not a wrong at all. And the other on policy is
being tried in the courts.
Let us not mix matters and jump to conclusions to mar what is
undeniably an Indian success story!
Arvind Padmanabhan is
Executive Editor-Business with IANS. The views expressed are
personal. He can be reached at arvind.p@ians.in
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