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Thursday, 29 September 2011 00:00
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The furore created over the finance ministry’s ‘office memorandum’ blaming P Chidambaram for not stopping A Raja’s spectrum scam has yet to die down, and Prime Minister Manmohan Singh has gone and stirred up a fresh controversy. On board his aircraft, on the way back from the US, he told reporters that he had, in fact, agreed to the then telecom minister Dayanidhi Maran’s suggestion in 2006 that the pricing of spectrum be removed from the terms of reference (ToR) of the Group of Ministers (GoM). This is critical since, once spectrum pricing was removed from the GoM’s ToR, it was not possible for the GoM to even examine the issue. In the event, all that the GoM concentrated upon was on how to get the defence forces to vacate spectrum—this involved laying of, for instance, a dedicated optic fibre network for the communication needs of the armed forces—so that this could be used for commercial telephony/Internet.

The problem with the PM’s statement, however, is that it takes us back to square one. Sure, the GoM’s ToR was changed at Maran’s behest, but as the finance ministry’s ‘office memorandum’ of March 25, 2011, points out, in March 2007 the then finance secretary (now RBI Governor D Subbarao) wrote to the telecom ministry and the Cabinet Secretary asking that spectrum pricing be brought back on the ToR of the GoM. As we know from the ‘office memorandum’, this never happened; and it wasn’t just Chidambaram who was to blame as Raja kept the PM informed of his decisions and summarily rejected the PM’s suggestion of an auction.

While a failure to auction spectrum cannot be used to hang the government, no matter how much the BJP would like, what has complicated matters is the obvious contradictions in the government’s stance. If the government was not in favour of auctions in the belief that this would raise consumer prices, why was the finance ministry constantly pushing for it? If the finance ministry felt so strongly in 2007, why did it not pursue this further? If, even after three years, the government finally decided that it would stick to the no-auction-is-good-policy as seems to be the case, why did the finance ministry get an ‘office memorandum’—this is an official paper of the ministry, finalised after consultations at all levels in the ministry—written on the subject in March 2011 which was in favour of free-market pricing of the spectrum? Hopefully someone will shed light on these obvious contradictions.


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