2G Spectrum: Raja not only ignored, but also misled PM

Also reproves Raja for ignoring law ministry’s advice on referring matter to EGoMs

Former communication and IT minister A Raja’s assertion that his first-come-first-served policy of allotting telecom licences had the endorsement of Prime Minister Manmohan Singh appears to be incorrect, correspondence between the two reveals.

The Comptroller and Auditor General (CAG) report says the communications minister didn’t pay heed to the prime minister’s advice. The report also reproves Raja for ignoring the law ministry’s advice on referring the matter to the Empowered Group of Ministers.

Correspondence between the Prime Minister and Raja, which is available with Business Standard, illustrates how the latter ignored the advice of both the prime minister and the law minister and went ahead with the process of selling licences on a first-come-first-served basis. He even kept the prime minister in the dark by giving him partial information.

The Department of Telecommunications (DoT), in order to verify the legality of the process it was adopting, approached the Ministry of Law and Justice to get an opinion from either the Attorney General or the Solicitor General on this matter. The law secretary, T K Viswanathan, wrote in his reply to DoT that questions which were flagged for the opinion of Attorney General or Solicitor General, were too broad and forwarded the file to Law Minister H R Bhardawaj. The minister, in his file, noted that in “view of importance of the case and various options indicated in the statement of the case, it is necessary that the whole issue is first considered by an Empowered Group of Ministers”.

Dissatisfied by this, Raja wrote a letter to the prime minister the next day showing his displeasure over the decision to refer the matter to the EGoM and wrote that the decision was “totally out of context”. In the same letter, he informed the prime minister that the department had decided to go ahead with the process of giving the licences on the first-come-first-served basis.

The prime minister replied the same day. And, noted that since “a number of issues relating to allocation of spectrum have been raised by telecom sector companies as well as in sections of the media”, the minister should pay “urgent consideration” to the “issues relating to enhancement of subscriber-linked spectrum allocation criteria, permission to CDMA service providers to also provide services on the GSM standard and be eligible for spectrum in GSM service band, and the processing of a large number of applications received for fresh licences against the backdrop of inadequate spetrum to cater to overall demand.” He ended the letter saying: “Let me know of the position before you take any further action in this regard.”

Raja replied to the letter of the Prime Minister the same day. In the introductory part of the letter he wrote: “There was, and is, no single deviation or departure in the rules and procedures contemplated, in all the decisions taken by my ministry and as such full transparency is being maintained by my Ministry and I further assure you the same in future also.”

In his letter while defending the position of not auctioning the licences, he wrote that the matter was considered by the Telecom Regulatory Authority of India and the Telecom Commission and both were against it. This argument of Raja is ridiculed in the CAG report, which says, “The recommendations of the Trai were never discussed in a meeting of the full Telecom Commission.”

Clarifying the position of his department on the issue of dual technology Raja wrote to the prime minister that the decision to allow dual technology was made on the recommendations of Trai. Another reason which he gave for implementing the dual technology was that allowing it would make the rollout of networks faster which would benefit the customers as it would result to increase tele-density and would lead to reduction of rates. He defended his decision of not going ahead with auction of spectrum on the grounds that it would not ensure a “level playing field for new entrants.”

Almost a month before Raja sold the licences, the PM, at the India Telecom Conference in New Delhi, said since spectrum was a limited resource, it should be used optimally. The policy regime should be fair, transparent, equitable and forward-looking and that it should ensure that the government’s revenue potential was realised.

“In the final analysis,” he said, “the key issues are correct pricing, fair allocation rules and a pro-competitive stance”. So, the message the PM was trying to send to Raja again, was to make the process of selling the licenses efficient and transparent.

But the correspondence suggests the minister ignored this advice and went ahead to grant licences to nine companies while many others waited for their chance.