'Needle of suspicion points to the PMO'

Print edition : August 14, 1999

Kapil Sibal, senior advocate in the Supreme Court, has taken time off from his legal work to function as a spokesman for the Congress(I) in the electoral context. Busy drafting the party's campaign material, he spoke to Sukumar Muralidharan on his perceptions of the controversy over the telecom policy. Excerpts:

Do you think the new telecom policy goes beyond the powers of a caretaker government?

Absolutely. This new telecom policy of March 1999 allows migration of existing licensees to a regime of profit sharing. Now this is a shift from the original telecom policy of 1994, on the basis of which tenders were invited. It would mean that hencefort h the policy should be based on revenue sharing rather than outright licensing. This is an entirely new policy in contradistinction to the older one.


You mean it provides a new dispensation for existing licensees and condones their default on contractual agreements?

Not only for existing licensees but also for new licensees. It is a new policy for future licensees and a new dispensation for existing licensees. A caretaker government cannot take policy decisions of this nature, because there are long-term revenue imp lications.

So, essentially by permitting this migration they are bailing out companies that have been defaulting on contractual obligations?

It is the other way round. It is the Government that is being bailed out by the private telecom operators, because there is no doubt about the fact that the needle of suspicion directly points to the Prime Minister's Office.

You mean there has been an element of reciprocity in these transactions?

There has undoubtedly been and this will be established by a CBI (Central Bureau of Investigation) inquiry. This is not something that happened overnight. There were writ petitions pending in various High Courts on the telecom issue. It has been the clai m of the private operators that when they made their bids, it was on wrong assumptions about their revenue-earning capacity. Their other case is that the Government has been delaying interconnectivity and other entitlements that they were assured of unde r the licensing agreements. Therefore some private operators had a grievance. When this was going on in court, the Government took the consistent position that these are binding contracts. This being the situation, a meeting was scheduled at the office o f Sushma Swaraj, the then Minister for Communications, with all the private telecom operators. Now Sushma Swaraj, if you remember, postponed the meeting. What was the reason for this? Then the following day she called off the meeting. Why did she do that ? Why was she so upset? She must have got some information from somewhere that some deals had been clinched. That was the beginning of the scam which I am soon going to make public.

Is that when the reciprocal system of rewards began?

Obviously. Some benefits had to be given then to the private operators. Sushma Swaraj was upset about this and had to be sacrificed. Then came Jagmohan, who must have obviously learnt what had happened. But he is a very honest Minister and took a very to ugh position. He became an obstacle but he was sensible and took the opinion of the Attorney-General, who said there could be no question of a migration to revenue sharing. This was in January 1999. So Jagmohan also had to be eased out.

But they took a long time doing it...

Because Jagmohan spent a long time resisting. And when he was eased out, the Minister who took charge had a different opinion, because he was the Prime Minister. The Attorney-General then conveniently changed his opinion because, he said, the terms of re ference were different. The specific terms of reference were - could there be a migration from a licence fee regime to a revenue sharing regime? So he said there could be, whereas previously he had said there shouldn't. It is the subtle distinction betwe en what should happen and what can happen.

There is an argument that the financial institutions had exposed themselves heavily in the telecom sector and needed a bailout. Do you find this plausible?

There were two bailouts in this. One was the bailout of the Government by the private operators because elections are coming. The other was the quid pro quo. The rest are all excuses.

What happens in any lending contract in which the lender gets over-exposed? You do not bail it out. Most of the telecom companies have assets in India which will take care of the debts. And financial institutions do not commit themselves to any project w ithout adequate collateral.

So forfeiture of licences and the sale of existing assets to a new operator would have been an option.

Either that or instalment payments as Pranab Mukherjee had suggested.

It has been made out that Pranab Mukherjee also supported the proposal for a switch to revenue sharing...

That is absolutely wrong. Pranab has explained the entire proposal in a letter to the Prime Minister dated June 5. Now look what the BJP has done with a letter written to the Prime Minister in his capacity as Minister for Communications. It gets into the hands of the spokesman of the BJP. This is completely unethical. An official document cannot be put into the hands of a party spokesman to make political capital out of.

Do you think the shifting of Ministers is a bit unusual for a caretaker government?

Totally. The Minister who should have been shifted when the whole nation was against him was George Fernandes. But he was not moved. They did so with an honest Minister who stood his ground.

Does the Congress(I) feel in some way responsible for the policy confusion, since the rules for privatisation were written by the Congress(I)?

I think that basically the policy is good. We have to privatise the telecom sector just as we have to do with various other industries.

But the problems of revenue projections, of licence fee defaults, were all inherent in the Congress' policy...

The problem is at both ends. The Government is not performing according to the obligations it has undertaken. This has certain revenue implications. The other thing that has happened is that TRAI has been completely excluded. Our policy envisaged TRAI as an arbiter.

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