What now, Mr Sibal? PDF Print E-mail
Saturday, 05 February 2011 00:00
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Kapil Sibal’s admission, on the basis of the Justice Shivraj Patil report, that all licences issued by A Raja were illegal (‘in deviation of extant policies’, to use the exact phrase) is certain to throw the stock markets into a tizzy when they reopen on Monday. Not only will telecom stocks take a mauling, you can expect the same for other stocks related to telecom—this applies to real estate firms who benefited from Raja’s largesse and also to banks who have lent to these firms. Given that there is no certainty about the future course of action, the uncertainty will remain for some time—Sibal has said he will refer the Patil report to the CBI, and government officials argue it’s not possible to cancel the 157 licences (this includes the 35 ‘dual technology’ licences) that were issued by the government, never mind whether the policy was legal or illegal. This is unlikely to be accepted by anyone, so the Opposition will up its attack, and it is unclear if the Court will accept it either—in any case, those arguing the case in the Court will certainly bring up the matter. Either way, the matter is certain to remain embroiled in the Court for some time to come. What the government has said it will do, though, is to try and ensure those firms who were clearly ineligible (as in the 85 instances pointed out by the CAG) or who did not even roll out their networks (pointed out by Trai) are penalised and, if possible, their licences cancelled.

Sibal has, expectedly, made much of the fact that the Patil report says the policies followed by the NDA were flawed as well—at his press conference, Sibal smiled and said that while Raja said he was following the previous government’s policies, those policies themselves were flawed! As this newspaper has been arguing, this is mere obfuscation. There is no doubt the BJP violated its own Cabinet decision that all future mobile licences would be auctioned—indeed, FE was the only newspaper to highlight Trai chief Pradip Baijal’s letter of November 2003 on this that led to the Tatas getting 9 extra licences at 2001 prices, and Bharti Airtel, Vodafone and Dishnet getting 1 each. But important caveats need to be made here.

One, at the time the NDA did its little number, and when Dayanidhi Maran followed suit in later years, the demand-supply situation was very different. A total of 51 licences were given before Raja came on the scene in this illegal and non-auction manner. At that time, however, the government had enough spectrum to give out 208 licences (51 issued before Raja + 157 given out by Raja). So there was one application for each 4 licences that could be issued—this suggests the price, even in an auction, may not have been too high. Also, 21 of these 51 licences were in ‘C’ circles like Bihar and Himachal Pradesh where there were no bidders in 2001 and where the bids in the 3G auctions in 2010 were very low. In contrast, when Raja was doing his number, he had 575 applications for 122 licences (the applications were only for new mobile licences, not for the dual technology ones)—four applications for each licence, is the reverse of the pre-Raja situation, and would surely see auction bids soaring.

Two, the issue isn’t about whether the NDA got it wrong (Maran, by the way, was the UPA’s minister). It was about how the entire UPA went along with Raja. On November 2, 2007, Raja informed the PM that he had got 575 applications but didn’t have the spectrum to give to all of them, and so was going to advance the cutoff date from October 1 to September 25. The PM didn’t protest too much and while the press, including FE, made much of the PM asking Raja to go in for auctions, Sibal has said too much was being read into the letter, and the PM never really asked for auctions, but suggested it as one of the many options! Indeed, even today, the government’s affidavit in the Court defends the no-auction policy on the grounds that auctions make phone tariffs rise. And for all the government’s talk of Raja not listening to the law ministry, the government’s affidavit makes it clear that his press release about advancing the cutoff date had been cleared by the law ministry; the telecom ministry’s letter telling the CAG it had no locus standi in examining ‘policy decisions’, the affidavit says, was also cleared by the law ministry.

Spreading the muck around, Sibal hopes, will get the government off the hook. It does little of the sort. At the end of the day, he has admitted the 157 licences issued were ‘in deviation of extant policies’. Few buy the government’s argument that this is not a sufficient ground to cancel these licences—the argument being given is that it is not the private sector’s fault that the government got the policy wrong! It’ll be interesting to see how the government makes that one fly.


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