The Smelly 2G Spectrum Scam


It will be a pity if Telecom Minister A Raja gets off the hook on technicalities. That’s what he is trying to do. When questioned about the resounding success of the public auction of the 3G spectrum compared the pathetic revenue generation during the 2G spectrum sale, the minister went to great length explaining the technicalities of the auctions by using the analogy of ‘Basamati rice’ and ‘PDS rice’.

 So let us make an attempt to understand the difference between basmati and public distribution system rice. The auction for ‘Basmati’ 3G mobile license, through a transparent auction, ended with RCom, Bharti and Aircel bagging 13 circles each, and left the Government of India with a Rs. 67,710 crore revenue windfall. The revenue amount exceeded the wildly optimistic expectations of Raja at Rs. 40,000 crore and even Finance Minister Pranab Mukerjee’s estimate of Rs. 35,000 crore. And if you compare the all India average price of the ‘PDS’ 2G and ‘Basmati’ 3G, the difference was a staggering 900 per cent or 9 times.

Exactly an year back, when the ‘PDS’ 2G spectrum was auctioned under the guidance of Raja, using a contentious ‘first-come-first-served’ system, in the way movie tickets are sold. Raja selectively interpreted recommendations of the TRAI to favour a privileged few for whom the rules of the game were changed. Under the influence of the corporate lobbyist Niira Radia, some non serious players like Unitech, S Tel, Swan Telecom, Loop Telecom (BPL having exited business once),  Sistema Shyam TeleServices (MTS), Allianz Infratech, Datacom (Videocon) and Spice, won an ‘all-India’ mobile telephone licence with bundled spectrum for just Rs 1,651 crore.

But soon after the ‘PDS’ 2G licence sale, the public distribution rice suddenly turned to gold.  Within days of getting the licences, the new entrants who had no telecom assets but for a ‘paper licence’, gifted by Raja, sold part of their stake at huge premium. To get a clearer perspective, in Sep 2008 Swan Telecom sold 45% stake to UAE’s Etisalat for around Rs. 4,200 crore. A month later Unitech offloaded 60% to Norway’s Telenor for Rs. 6,200 crore. Then in Jan 2008, Tata Teleservices sold 26% stake to Japan’s DoCoMo for 13,230 crores. The ownership and ownership transfer deals of Shyam and Russia’s Sistema and Siva Ventures and Bahrain’s Batelco are shuddered in secrecy. Some of the companies like Allianz Infratech and Datacom are yet to launch or struggling to launch services and the licence of Spice has been cancelled.

India is a lucrative 300 million mobile user market which adds about a 100 million mobile users every year. The smelly PDS license distribution was Raja’s strategy to bring in foreign telecom players like Sistema, Batelco, Telenor, Etisalat, DoCoMo,  etc to come into  India’s lucrative market, through the backdoor, unmindful of the loss to the Indian exchequer, using the faulty methodology and government iron hand. Much of this corruption which allegedly borders Rs. 1 lakh crores, took place under the nose of our most honorable PM Manmohan Singh.

On Nov 2 2007, PM wrote to Raja and asked him to ensure the 2G spectrum was allocated in a fair, efficient and transparent manner and to ensure that the licence fees are appropriately revised. A brazen and defiant Raja, did absolutely nothing to adhere to the PM’s directions and granted 2G license for just Rs 1,651 crore. And technically, since there was no auction we can only estimate the government losses in 2G spectrum licence to Rs 40-60,000 crores.

Our country has a long history of dubious characters getting off the hook on one technicality or another. Raja claims that all his decisions had been taken ‘in consultation’ with the PM. The DMK and Karunanidhi claims that Raja is being targeted because he is a ‘Dalit’. Not too long ago, during the formation of UPA II, the Dravidian Patriarch Karunandidhi had to forgo the claims of his own daughter Kanimozhi and nephew Dayanidhi Maran to promote Raja as the Telecom Minister for a second term. Why did Karunanidhi have to promote Raja more than his dear family? Is Raja is conduit for the dirty money for Karunanidhi?

Thanks to the political compulsions of the UPA, the Comptroller and Auditor General of India, Central Vigilance Commission and Central Bureau of Investigation probe might not nail this new found Dalit messiah of DMK. The STel case in the Delhi High Court, sure gives a glimmer of hope, because we Indians still have some ‘trust’ in our judiciary.

No technicality can hide facts that stare everyone in the face – that spectrum sale was a money game before the last General Election while the exchequer lost at least the same amount of money that we gained from the 3G sale because we positioned 2G as the ‘smelly PDS rice’. That obscenely huge amounts changed hands which makes me wonder if the  DMK today stands for ‘Delhi Money for Karunanidhi’.  And thanks to the lobbying and murky deals that flourished in the culture he singlehandedly promoted in the Telecom Ministry, this 47 year old MP from Nilgiris, Andimuthu Raja, has shown that the great Indian telecom revolution has a rather murky underbelly.

Photo: Copyright Hindustan Times.

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