A Raja's orchestra begins PDF Print E-mail
Friday, 10 December 2010 00:00
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The BJP's 2001 and 2003 policies were cleared by the courts. Let's not get diverted from the Raja scam
If Shourie is to be blamed for lowering telecom taxes, do we need to do the same for finance ministers like Manmohan Singh who lowered taxes in general?
What’s going on? We’re in the middle of taking action against A Raja and the 122 licences he issued illegally (that’s why the raids on him, that’s why the cancellation notices to 85 firms), and the Congress party is trying to expand the probe to include what the BJP did in 1999 and 2001! Is Congress spokesperson Manish Tewari aware of what he’s doing or is he just trying to score political points when he says “This extension of the investigation of (2G) to 2001 would nail the nepotism and corruption of the NDA, especially of the BJP”?
If it were just Tewari, you could think that it was just political posturing but when new telecom minister Kapil Sibal says something similar, you begin to wonder. Sibal told ET that auctions may not necessarily be the best thing for the sector since it could lead to a situation “such as in 1995, where companies overbid for spectrum … the very thing can happen again, because with so many operators, everybody needs spectrum.” Sibal’s defending Raja’s actions and Tewari wants to go back to the BJP in 1999! A one-man committee has been appointed by Sibal to look into all issues since 2001, and will almost certainly be used as an excuse by the Congress for not acting upon the Raja scam.
That auctions don’t raise consumer tariffs is obvious when you see that 3G tariffs (of Tata DoCoMo) are lower than even 2G ones though the 3G licence costs ten times as much—nor did Vodafone raise tariffs after it spent $11 billion to take over Hutch’s India operations. But let’s understand what Tewari is trying to say, and what the Justice Shivraj V Patil committee is expected to investigate.
Let’s begin in 1999 when the BJP allowed firms to move from a fixed licence fee to a revenue-share, since the Congress has released excerpts from a CAG report saying there were large losses due to this. I believe the licences should have been cancelled when the licensees defaulted on their licence fees, but it’s difficult to say the government lost a lot of money due to this. Had the government not moved to revenue-share, the companies would have gone bankrupt, so the government wouldn’t have got the huge licence fees anyway—and since the companies alleged the telecom ministry was also to blame, it would have got stuck in courts for decades.
In 2001, the year that the Justice Shivraj Patil investigation starts from, NDA minister Ram Vilas Paswan allowed what’s called ‘limited mobility’—that is, he allowed firms with fixed landline licences to offer mobile phone services, services that were limited in that they didn’t allow roaming across cities. While saying the BJP was guilty of many flip flops, in his reply to Rajeev Chandrasekhar’s letter, Ratan Tata has praised this policy! No matter how unfair you think this policy was (and I think it was since the fixed land licensees paid less than a third the licence fee the mobile phone firms paid and had other benefits as well), it has been cleared by multiple courts.
In 2001, the Cellular Operators Association of India (COAI) went to the TDSAT against the policy and lost the case. COAI appealed to the Supreme Court and the Court told the TDSAT to examine their grievance afresh. By this time, there was another head of the TDSAT and through a 2:1 judgment, the TDSAT okayed the ‘limited mobility’ policy. What it did do, however, was to say that the ‘unlimited mobility’ that Reliance Infocomm was offering had to be stopped. Under Arun Shourie, however, the government came up with a policy to legitimise this, in return for a fat penalty on Reliance—all told, Reliance forked out an additional Rs 1,700-odd crore, a huge penalty by most standards. Even before the policy came out, the COAI appealed the TDSAT judgement in the Supreme Court. As Shourie entered into a negotiation with COAI members and offered to address their concerns by lowering their licence fees among others, COAI withdrew its case from the Supreme Court. So, you can disagree with Shourie’s view that it was difficult to cancel a licence when there were more than a million subscribers using it, but how do you bring it up again when the case against it was withdrawn from the Court? By the way, while accusing the BJP of flip-flop policies, this is the second of its policies that Ratan Tata has supported.
There is then the 2 percentage point reduction in licence fees that Tewari accuses the BJP of—this decision of Shourie’s, he says, cost the country Rs 60,000 crore. Presumably this is something Justice Patil will also look at. Shourie’s decision, which was critical for getting the COAI to withdraw its case in the Supreme Court, may have been controversial, but how does Tewari arrive at his figure of a loss? It’s like saying a reduction in income taxes, done routinely by finance ministers, resulted in a loss of Rs 1,00,000 crore to the government. Indeed, one of the first things Manmohan Singh did as the finance minister was to lower tax rates across the board—is he to be held guilty now? The mobile industry is heavily taxed and lowering taxes on it has allowed it to become so affordable. Shourie’s reduction has to be seen against the fact that spectrum/licence charges from the industry have increased from Rs 5,467 crore in 2002-03 to Rs 13,588 crore in 2009-10. Where’s the scam?
The DoT is, in fact, in the process of lowering these fees to a uniform rate and Trai has also given recommendations on this account—rates are to be brought down from 15% in 1999 to 6% by 2014. Is this corruption? Taxes on long distance calls have fallen to a third—is that a revenue loss or a boon to users?
With the Congress’s focus shifting from fixing the Raja scam to just tarring the BJP with the Raja brush, the ball is once again in the Supreme Court. It got the CBI to move, it got the CVC to recuse himself from overseeing the investigation, and it was the fear of the Court’s censure that made the government issue notices of cancellation to 85 firms. Meanwhile, write off this session of Parliament completely and, if things go as they are now, even the budget session.

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