2G: Raja & beyond

Although the Chief Vigilance Commissioner P.J. Thomas has apparently got a reprieve from the Supreme Court, the spectrum scandal is not going to disappear from the mindspace of the Indian public in a hurry. After all, this is not any ordinary scam but the biggest-ever loss to the national exchequer on account of corruption, even if government functionaries continue to nit-pick about the size and the nature of the losses that have been incurred.
After having decided to serve showcause notices to dozens of telecom firms who were not eligible to receive licences (that came bundled with precious electromagnetic spectrum or radio frequencies) in the first place, the new Union minister for communications and information technology Kapil Sibal has stated that the department of telecommunications (DoT) will commence an exercise to ascertain the “actual” loss to the exchequer in contrast to the “presumptive” loss of `1,76,645 crore that was estimated by the Comptroller and Auditor General (CAG) of India in its report presented in Parliament on November 16.
“All the numbers that are being handed out are all presumptive as the CAG itself has said”, Mr Sibal has been quoted as saying. He added that: “We must move from presumptive to certainty”. The minister said the DoT’s exercise would aim at estimating the net present value of the licences that were issued in January 2008 — that month, the DoT had issued 122 new unified access services (UAS) licences over and above 35 “dual technology” licences bundled with 4.4 megahertz (MHz) of start-up spectrum.
This columnist argues that the exercise proposed by the DoT may be a cosmetic one at best or of little use, at worst.
Even after the net present value of the licences issued are ascertained, the estimate of the net revenue loss to the exchequer would still be a “presumptive” or a “notional” figure since a price or a value of a licence would not have been arrived at or discovered through a transparent public auction. This is clearly the issue at stake.
What happened in January 2008 was that an all-India mobile telecom licence was priced at around `1,586 crore — a value that had been arrived at on the basis of an auction that had taken place seven years earlier — whereas it should have priced seven to 10 times higher. It’s as simple as that, even if details about the scam are sought to be obfuscated in technical jargon and legalese. The second aspect of the scandal that the DoT changed its policy to provide existing holders of telecom licences a bonanza by allowing them to use two competing technologies — global system of mobile (GSM) communications and code division multiple access (CDMA) technologies — instead of one has been the norm. The third and final aspect of the scam is that in 2007, nine existing players were provided spectrum beyond the contracted quantum of 6.2 Mhz despite the fact that many applications for new licences were pending.
The CAG used two parameters for assessing the possible “presumptive” or “notional” loss which the exchequer has suffered. In November 2007, S Tel had written first to the Prime Minister and later to the then telecom minister A. Raja offering to pay `13,752 crore over a period of 10 years for allotment of 6.2 MHz of GSM spectrum.
The CAG has taken this figure as a benchmark and asserted that based on this figure, the government would have generated a revenue of `67,364 crore by selling 122 new UAS licences, 35 licences under the dual-technology regime and excess spectrum beyond the contracted amount of 6.2 MHz.
Further, after taking into account the revenue that was generated after the public auction of third generation (3G) spectrum in 2010, the price of spectrum for the 122 licences issued can be established at `1,11,512 crore against `9,014 crore that the government actually earned. In addition, `40,526 crore would have been generated by selling the 35 licences under the dual-use category and `13,841 crore for the excess spectrum. Hence, the CAG report estimated the total loss to the exchequer, based on the 3G auctions, as `1,76,645 crore.
The total figure of the loss incurred by the exchequer is significant, but perhaps less important than the deliberately opaque and arbitrary manner in which telecom licences were issued ostensibly on a first-come-first-served basis in violation of basic norms of fair-play and probity to favour a select few firms, some of whom had no prior industry experience, thereby enabling them to jump the queue ahead of others. Mr Sibal should focus on this aspect of the scam if he is really serious about cleaning up the system.
The government has acted rather late in the day. The spectrum scam has gone way beyond Mr Raja. The question being asked is why the Prime Minister chose to remain passive or silent when his own erstwhile Cabinet colleague was looting the exchequer. What is inexplicable is why the government is opposing the formation of a Joint Parliamentary Committee (JPC) to investigate the scam. Even after a JPC gives its recommendations, the government will still have to depend on prosecuting agencies like the Central Bureau of Investigation, the Enforcement Directorate and the income-tax department to initiate punitive action against the guilty.
Is it that Dr Manmohan Singh has terrible memories of the time he was asked to depose before the JPCs that inquired into the Harshad Mehta stock market scandal in 1992 and the one that investigated the Ketan Parekh scam nine years later? Or is it that the ruling United Progressive Alliance coalition does not wish to provide more opportunities to the Opposition to keep the pot boiling so that the spectrum scam continues to hog headlines for months to come? Is the government just being cussed? Or is it making a tactical blunder in assessing the political fallout of the scam? Is it merely buying time as the Supreme Court continues to deliberate on the subject?
One hasn’t heard from the Prime Minister himself, nor is one likely to soon. Still, his silence is deafening.

Paranjoy Guha Thakurta is an educator and commentator