Offence as defence

Published : Feb 11, 2011 00:00 IST

Kapil Sibal trashes the CAG report which put the presumptive loss due to the 2G spectrum allocation at Rs.1.76 lakh crore.

in New Delhi

THE Congress-led United Progressive Alliance government, it seems, has decided to hold a parallel media trial on the issue of corruption in the 2G spectrum allocation. At a time when Parliament's Public Accounts Committee (PAC) is probing the allocation of spectrum by former Union Telecom Minister A. Raja in 2008 and when the CBI is investigating the criminal culpability on his part in the procedures adopted for the purpose, his successor in the Ministry, Kapil Sibal, has chosen to lambast the agency that unearthed the scam: the Comptroller and Auditor General of India (CAG). He has trashed the very basis on which the agency computed the presumptive loss to the exchequer Rs.1.76 lakh crore.

Human Resource Development Minister Sibal, who has been holding the additional charge of Telecommunications since Raja resigned, addressed a press conference in New Delhi on January 7 and declared that there was no scam involved in the entire issue and the country had not lost even a single paisa on account of spectrum allocation. On the contrary, he said, the country had benefited by the manner in which Raja pursued the telecom policy of 2001 to distribute spectrum on a first-cum-first-serve basis.

That makes one wonder what the PAC or the CBI is probing, and what the Supreme Court is monitoring when there was no corruption or loss to the exchequer. Also, it gives rise to the question whether Sibal has breached protocol by speaking out in public when a parliamentary forum is probing an issue or whether he is guilty of contempt of Parliament as a parliamentary forum enjoys the same sanctity as Parliament itself. Another poser is whether his party too holds the views expressed by him.

What Sibal said

Addressing the media, Sibal said the CAG had assumed a wrong methodology. The criticism of large revenue loss has received a great deal of attention in the press because of the size of the loss stated by the CAG. This estimate is based on the assumption that spectrum should have been auctioned or sold in some other manner which would have fetched the government the highest possible price. However, the logic underlying this estimate is completely flawed. Government policy is formulated with a view to maximising public welfare, and not merely to maximising government revenues. The pricing of different natural resources is often done in a manner that meets this objective, he said.

To substantiate his argument he cited the cases of other natural resources such as land and coal. For instance, he said, land was given free of cost to infrastructure projects such as construction of highways and coal prices in India were kept much lower than global prices in order to ensure that the cost of power remained reasonable; fertilizer prices involved significant subsidy as do the prices of wheat, rice and kerosene, supplied through the public distribution system. In all these cases, if the objective of the government was only to maximise revenues, much higher price would be charged, but there are good reasons why that is not done, he said.

Justifying the policy under which 2G spectrum was allocated in 2008 at 2001 prices, that too on a first-cum-first-serve basis and not by auction, he said the idea was to provide telecom services to citizens across the country at reasonable prices, which had been made the basis of the new telecom policy from 1999 onwards when the private sector was allowed into the telecom sector. The new policy explicitly recognised the need to bring greater competition in the telecom sector in both urban and rural areas and to provide a level playing field to all players, he said. He said the reduction in licence fee in 2001 and again in 2004 by the then government could have been said to have caused huge losses to the public exchequer but it, in fact, benefited the people at large by reducing prices and increasing tele-density. These measures have helped increase tele-density and reduce the prices of mobile services for the aam aadmi. The resultant benefits to the economy as a whole is well known, Sibal said.

He said the investment in the telecom sector was huge and if at the entry itself the government charged a high price, then common people would end up paying high prices for the services. This is particularly so when we wish to cover the entire length and breadth of the country. If at the time of issuing licences the government charges a very high entry fee it would reduce the resources available to the operators to undertake the necessary creation of infrastructure. It would also eventually impact the prices charged by the operators and thereby limit the services to those who can afford higher prices, he said. This, he said, has been the essence of the telecom policy followed so far, and even the highest telecom regulatory authority, the Telecom Regulatory Authority of India (TRAI), had approved it by saying revenue generation should not be the sole determinant of policy governing the telecom sector.

He sought to dispel the notion that Raja had ignored the Prime Minister's specific guidance on the issue, saying there was only a set of suggestions formulated on the basis of feedback available from multiple quarters. The only direction from the Prime Minister was that the Ministry should act in a fair and transparent manner and the Prime Minister should be kept informed, he said. Sibal reiterated that Raja had kept the Prime Minister informed at all stages. He said the CAG's assumption of computing losses was on the basis of the auction conducted for allocating 3G spectrum. This, he said, would not be a valid conclusion as 3G had value-added services such as video and large data transfer primarily used by individuals or companies with high paying capacity. In the case of 3G there is neither an issue of level playing field nor one of needing to ensure that prices are kept within the reach of people in the lower income brackets, Sibal said.

He said the case here was akin to charging toll for the use of highways while rural roads are never tolled. The benefits of the government's telecom policy, he said, was evident in the fact that the average tariff has come down from Rs.17 a minute in 1999 to about Rs.3 per minute in 2004, and by March 2007 [to] as low as 57 paisa per minute while today it has reached a level of 30 paisa per minute. This is a direct and tangible benefit. The benefit of this reduction in tariff is estimated at over Rs.1,50,000 crore per annum to the consumer, he said.

He said the loss could be considered nil if factors such as the decision to give extra spectrum to existing operators such as Bharati, Vodafone and BSNL, which was part of a policy approved earlier (the CAG had computed the loss because of this at Rs.37,000 crore); the assumed high spectrum which was to be given to new players in future; and the rate of inflation at roughly 10 per cent a year from 2008 onwards were counted. The figure of Rs.1.76 lakh crore, with due respect to the CAG, is utterly erroneous. A complicated and complex issue like this should not have been dealt with in this presumptive fashion. The CAG has embarrassed the government, he said. He, however, admitted that there were serious procedural lapses.

Congress' view

Sibal may not have been shooting his mouth off. According to well-placed Congress sources, he was only trying to do what he was directed to by the Prime Minister and the party high command, which is concerned over the wrong message sent out to the people by the scandal. The media have consistently used the term scam, implying that lakhs of crores were swindled by those in the government, with the Prime Minister looking the other way. This, however, is not true. This is not a scam as is made out to be. But yes, there were procedural lapses which are serious in nature and in which criminal culpability on the part of some individuals has been suspected and this is what we are getting examined. This is why Raja had to resign because his name too got dragged in this process, said a senior Congress leader.

Explaining what these procedural lapses could have been, he said it was intriguing that the closing date for receiving applications had been advanced to September 25 instead of October 1 without proper information to all and that it was found that some companies had been stealthily informed of the same as the drafts deposited by them had been prepared before the closing date. Moreover, some companies that were dealing with real estate and had no experience whatsoever in the telecom sector had been given licences; these companies immediately sold off their stake at hefty prices. Then there are companies that have not yet started their services despite having got the licences. These issues need to be probed and the criminal culpability of those responsible should be fixed, but this cannot be described as a scam as there was actually no revenue loss to the government, said this leader.

According to the Congress leader, these issues were being put forward by the government in the PAC as well, but the PAC is a closed-door forum. Whatever is said inside is not coming outside. That is why we have decided to clear the air on some of these issues. We are only trying to set the public perception right, he said, adding that Sibal was speaking with the full backing of the Prime Minister and the party.

According to this leader, even Raja was saying the very same things, but since he himself is an accused his statement did not carry the same credibility as that of Sibal. Besides, Raja's reputation is also suspect, which is why whatever he said did not carry the same weight.

CAG's and PAC's objection

Murli Manohar Joshi, PAC Chairman, has taken strong exception to the statements made by Sibal at the press conference. He said, I would take necessary steps to ensure that such instances are not repeated. Sibal's statement, he told reporters, was improper, against propriety and an attack on the dignity of the PAC and the CAG.

The CAG, too, has described Sibal's comments on its reports as highly improper. A CAG spokesperson said in a statement that making public comments on a matter that was being investigated by a parliamentary committee was highly improper and might amount to contempt of House.

The Congress, however, sees nothing wrong in it. Its spokesperson Manish Tiwari said it was ironic that after holding a press conference on the report, the CAG was advising Members of Parliament not to comment on it because it was before the PAC.

What is wrong in discussing the report? After all, Sibal is the Minister in charge, he has the relevant facts before him and he is the best person who would know, said Shakeel Ahmad, another Congress spokesperson. Besides, the CAG report, having been tabled in Parliament, is a public document that can be debated. After all, it is already being debated in the media without any contribution from our side, so if the Minister has commented on it, there should be no problem.

However, the BJP's chief spokesperson, Ravishankar Prasad, said, Sibal's unwarranted comments have sought to overreach parliamentary process when the PAC is looking into it. It is a frontal attack on the CAG, designed to save former Telecom Minister A. Raja.

The Communist Party of India (Marxist), too, came down heavily on the Minister. It said Sibal's statement on the issue was clearly meant to protect the ill-gotten gains made by corporates which got the licences at throwaway prices. It is clear from Sibal's defence that the UPA government is far more deeply involved than just the lone acts of A. Raja, the CPI(M) Polit Bureau said in a statement, adding that his bizarre defence of the 2G spectrum allocation once again underlined the need for a JPC to investigate the issue. It appeared to be a cover-up exercise to shield those who had benefited, CPI(M) leader Sitaram Yechury told reporters in Bangalore.

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