Finmin blames Chidambaram, Pranab backs Raja PDF Print E-mail
Friday, 23 September 2011 00:00
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The finance ministry babu’s letter on March 25, 2011, may have sought to blame the then finance minister P Chidambaram for his role in failing to prevent A Raja from issuing licences at bargain-basement rates, but Pranab Mukherjee had been supporting A Raja all the way.

This has been made apparent in a letter the current finance minister wrote to the Prime Minister on December 26, 2007, two weeks before the Raja scam. (Raja took the decision to allot licences in January 2008.) The same day Mukherjee wrote to the PM, Raja wrote to the PM saying he’d met Mukherjee several times and that Mukherjee had “further enlightened me to take a preemptive and proactive decision on these issues…to avoid any further confusion and delay”.

Given all the details in the finance ministry letter of how Chidambaram’s finance ministry failed to follow up on its requests that the spectrum be auctioned and that the matter be decided by a GoM (headed by Mukherjee), it is surprising that Mukherjee’s December 26 letter to the PM addresses none of these arguments.

Interestingly, a former bureaucrat who worked with Chidambaram in the finance ministry points out that a GoM headed by Mukherjee had been set up to examine spectrum pricing, but that spectrum pricing had been kept out of its purview with the consent of the Prime Minister. The bureaucrat pointed out that the telecom ministry had repeatedly ignored finance ministry advice to raise entry fees.

Instead of addressing these issues, Mukherjee’s December 26, 2007, letter recounts the history of the licensing and says “department of telecommunications may continue to follow this policy till any further changes are made in this regard”. While the PM wrote to Raja on November 2, 2007, suggesting that Raja may look at the possibility of auctioning licences, Mukherjee’s letter backs Raja’s first-come-first-served policy. Indeed, it talks about the new, and higher, norms for the subscriber-linked spectrum criterion, but does not address the issue of there being 575 applicants for just 122 licences.

Mukherjee’s letter concludes, saying “While under the existing policy, the government may keep on issuing new licences, the criteria for the grant of licences may be strengthened and put in the public domain at the earliest”.

On the issue of dual-technology licences, Mukherjee’s contribution is to say the licence fee these firms pay “may be termed as ‘crossover fee’ to distinguish it from licence fee”. At no point does the head of the GoM deal with the issues raised by the then Trai chief Nripendra Misra – Misra had recommended that, since they were benefitting in a big way, the dual-technology firms should pay a much higher annual spectrum charge. Nor does Mukherjee’s note address other changes made by Raja to Trai recommendations, which Misra had gone public with. While Misra had recommended that no licencees be allowed to do M&A operations till they rolled out their networks, Raja gave this the go-by – this is what allowed Swan and Unitech Wireless to bring in new investors and brought to light the enormity of the Raja scam.


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