The rapid expansion of mobile telephony in India has been accompanied by a series of scandals that have caused huge losses to the exch-equer. The scams have been largely a consequence of poor regulatory oversight and deliberate manipu-lation of policies and norms to favour select corporate entities. The most brazen of these scandals pertain to the questionable manner in which a finite national resource – electromagnetic spectrum used for mobile communications – was priced and allocated by the DoT under the now-disgraced former Union telecom minister A. Raja. According to CAG, the loss to the government may be as much as Rs 1,76,000 crore, making it the largest-ever scandal of its kind.
But this was hardly the first scandal since the government gave up its monopoly over the telecommunications sector in 1994. While this sector’s growth is often attributed to the posi-tive impact of deregulation, the other side of the coin is the crony capitalism that has been manifest in the manner in which the government applied its rules and guidelines, often in an arbitrary and opaque manner, to ensure that the playing field was far from level. Recommendations of the TRAI have been selectively interpreted and at times, ignored or manipulated.
In August 1996, the CBI registered an FIR against former minister of telecommunications Sukh Ram, after recovering Rs 3.62 crore from his residences in Delhi and Mandi. The large seizure of cash made it to the Guinness Book for the wrong reasons. Thirteen years later in 2009, a special CBI court sentenced him to three years of rigorous imprisonment after finding him guilty of “being part of a criminal conspiracy to defraud the exchequer”. The former minister remained behind bars for barely a month before obtaining bail.
The telecom licensing system initiated by Sukh Ram eventually had to be scrapped and replaced by a revenue-sharing arrangement in July 1999 by the NDA government. His Cabinet took this decision barely five days before the Election Commission formally announced the dates of the general elections that were conducted in September-October that year. The decision was questioned by then President K. R. Narayanan. The BJP argued that it was necessary to go ahead immediately with the introduction of a revenue-sharing system for private telecom operators to prevent firms from going bankrupt. Its political opponents, on the other hand, alleged that the decision was aimed at benefiting a few operators at public expense.
The removal of Jagmohan from the post of communications minister in 1998 was reportedly a consequence of his refusal to toe the line of the group in the NDA government that favoured revenue-sharing over licensing. Another former telecom minister, the late Pramod Mahajan, was accused of assisting one company (Reliance Infocomm) to become a nationwide operator offering “full mobility” in its cellular phone operations, instead of providing “limited mobility” through a wireless in local loop (WLL) system, without paying the full licence fee – though the actual decision in this regard was implemented when Arun Shourie became communications minister. This decision of DoT was also questioned by TRAI and resulted in a loss to the exchequer that was estimated to be in the region of Rs 1,100 crore – although Shourie claims that TRAI was consulted and its views considered.
While the most recent undervaluation and misallocation of spectrum is part of an earlier series of scandals, the sheer scale of the scam is unprecedented. The CAG (in its report tabled in Parliament on November 16, 2010) pointed out that there were three clear dimensions to the scam. First, DoT, led by Raja, not only under-priced second generation (2G) spectrum but also allotted it in an arbitrary and unfair manner using a first-come-first-served process and by bringing forward the cut-off date for receipt of applications for letters of intent. Secondly, a few companies (including Reliance and Tata Teleservices) gained because they were allowed to use two competing technologies – GSM and CDMA technology - using the same licence. Thirdly, DoT allowed certain companies (including Bharat Sanchar Nigam Ltd., Bharti, Vodafone and Idea) to use more spectrum than what their licences specified.
Thus, the total “presumptive” losses incurred by the country’s exchequer could range between Rs 66,000 crore and Rs 1,76,000 crore, the CAG argued. The attempt by the current minister for communications Kapil Sibal to trash the findings of the CAG and claim that there was actually no loss to the government has not convinced too many (barring, of course, a few loyal Congress supporters). Most have perceived his remarks as an attempt to protect Prime Minister Manmohan Singh who is being accused of maintaining a stony silence for three years although he was aware what was going on.The political fallout of the ugly underbelly of the Great Indian Telecom Revolution is still being played out.
But this was hardly the first scandal since the government gave up its monopoly over the telecommunications sector in 1994. While this sector’s growth is often attributed to the posi-tive impact of deregulation, the other side of the coin is the crony capitalism that has been manifest in the manner in which the government applied its rules and guidelines, often in an arbitrary and opaque manner, to ensure that the playing field was far from level. Recommendations of the TRAI have been selectively interpreted and at times, ignored or manipulated.
In August 1996, the CBI registered an FIR against former minister of telecommunications Sukh Ram, after recovering Rs 3.62 crore from his residences in Delhi and Mandi. The large seizure of cash made it to the Guinness Book for the wrong reasons. Thirteen years later in 2009, a special CBI court sentenced him to three years of rigorous imprisonment after finding him guilty of “being part of a criminal conspiracy to defraud the exchequer”. The former minister remained behind bars for barely a month before obtaining bail.
The telecom licensing system initiated by Sukh Ram eventually had to be scrapped and replaced by a revenue-sharing arrangement in July 1999 by the NDA government. His Cabinet took this decision barely five days before the Election Commission formally announced the dates of the general elections that were conducted in September-October that year. The decision was questioned by then President K. R. Narayanan. The BJP argued that it was necessary to go ahead immediately with the introduction of a revenue-sharing system for private telecom operators to prevent firms from going bankrupt. Its political opponents, on the other hand, alleged that the decision was aimed at benefiting a few operators at public expense.
The removal of Jagmohan from the post of communications minister in 1998 was reportedly a consequence of his refusal to toe the line of the group in the NDA government that favoured revenue-sharing over licensing. Another former telecom minister, the late Pramod Mahajan, was accused of assisting one company (Reliance Infocomm) to become a nationwide operator offering “full mobility” in its cellular phone operations, instead of providing “limited mobility” through a wireless in local loop (WLL) system, without paying the full licence fee – though the actual decision in this regard was implemented when Arun Shourie became communications minister. This decision of DoT was also questioned by TRAI and resulted in a loss to the exchequer that was estimated to be in the region of Rs 1,100 crore – although Shourie claims that TRAI was consulted and its views considered.
While the most recent undervaluation and misallocation of spectrum is part of an earlier series of scandals, the sheer scale of the scam is unprecedented. The CAG (in its report tabled in Parliament on November 16, 2010) pointed out that there were three clear dimensions to the scam. First, DoT, led by Raja, not only under-priced second generation (2G) spectrum but also allotted it in an arbitrary and unfair manner using a first-come-first-served process and by bringing forward the cut-off date for receipt of applications for letters of intent. Secondly, a few companies (including Reliance and Tata Teleservices) gained because they were allowed to use two competing technologies – GSM and CDMA technology - using the same licence. Thirdly, DoT allowed certain companies (including Bharat Sanchar Nigam Ltd., Bharti, Vodafone and Idea) to use more spectrum than what their licences specified.
Thus, the total “presumptive” losses incurred by the country’s exchequer could range between Rs 66,000 crore and Rs 1,76,000 crore, the CAG argued. The attempt by the current minister for communications Kapil Sibal to trash the findings of the CAG and claim that there was actually no loss to the government has not convinced too many (barring, of course, a few loyal Congress supporters). Most have perceived his remarks as an attempt to protect Prime Minister Manmohan Singh who is being accused of maintaining a stony silence for three years although he was aware what was going on.The political fallout of the ugly underbelly of the Great Indian Telecom Revolution is still being played out.
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