Bhupesh Bhandari: What Dr Singh knew

Was the PM aware of what was happening in the Department of Telecommunications under A Raja?

There has been a fresh demand to summon Prime Minister Manmohan Singh before the Joint Parliamentary Committee probing irregularities in the allocation of spectrum to telecom firms. Was the prime minister aware of what was happening in the Department of Telecommunications (DoT) under A Raja? Did he turn a blind eye to it? The 19 letters exchanged between Dr Singh and Mr Raja give us a good idea of what was going through the prime minister’s mind.

Dr Singh wrote on November 2, 2007, to Mr Raja that, given the scarcity of spectrum and the large number of applications received, DoT should consider (a) introduction of a transparent methodology of auction wherever legally and technically feasible, and (b) revision of entry fee which was benchmarked to an old figure. (The price of Rs 1,651 crore for a pan-India licence was fixed in 2001, when there were only a few million subscribers — the number had grown manifold by 2007.) “I would request you to give urgent consideration to the issues being raised with a view to ensuring fairness and transparency, and let me know of the position before you take any action in this regard,” he concluded.

Mr Raja replied to that letter the same day — it was written at the camp office at his home. “Vanakkam,” he began his letter, “I would like to inform you 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 [the] future also.” To auction 2G spectrum would be unfair to the new players when incumbents had got up to 10 MHz free, he said, and the issue of spectrum auction had been discussed with the Telecom Regulatory Authority of India (Trai) and the Telecom Commission “and was not recommended”.

Mr Raja added that DoT had earmarked 100 MHz in the 900 MHz and 1800 MHz bands for 2G mobile services. “Out of this, so far a maximum of about 35 to 40 MHz per circle has been allotted to different operators and [is] being used by them. The remaining 60 to 65 MHz, including spectrum likely to be vacated by the defence services, is still available for 2G services.” There was, therefore, spectrum available for newer players “even after meeting the requirements of the existing operators and licensees”. More players, he reasoned, would lead to better service and improved tele-density at lower tariff. And he said there was a need to allot spectrum quickly.

Meanwhile, the then commerce and industry minister, Kamal Nath, wrote a letter to Dr Singh on November 3, 2007, in which he expressed “concern on the sudden and alarming developments in the telecom sector” and added that “several prominent international strategic and financial investors have made serious commitments in the telecom sector in India, and it is important that the policies our government follows continue to support growth in the sector and remain fair to all players”. A comprehensive look was required, he said, and the right way was through a group of ministers. It seems that Dr Singh discussed the matter with Mr Raja on November 14, 2007. The next day, November 15, 2007, Mr Raja wrote to the prime minister that he was no less concerned about India’s image than Mr Nath, and all his decisions would be guided by the larger interest of the public, competition and growth of the telecom sector.

It seems Dr Singh wasn’t convinced that the policy of handing out spectrum at historical prices was the right thing to do. On December 12, 2007, at India Telecom 2007, he repeated: “The revenue potential to the government must not be lost sight of. After all, governments across the globe have harnessed substantial revenue while allocating spectrum.”

On December 26, 2007, Mr Raja laid bare his plans. The first-come, first-served rule, he wrote to Dr Singh, would have to be tweaked in view of the large number of applications that had piled up. In the past, when only one application was processed at a time, the date of application worked well to meet the first-come, first-served rule. Now that hundreds of applications were under consideration, first-come, first-served would mean whoever fulfilled the conditions of the letter of intent first got the licence first (and the spectrum that came with it). DoT officers were told to consider this letter as a policy directive.

The Prime Minister’s Office began to examine Mr Raja’s latest letter on December 31, 2007. The prime minister’s principal secretary, T K A Nair, marked on the file that the “prime minister wants it informally shared with the department” and “does not want a formal communications and wants the prime minister’s office to be at arm’s length”. The observation came up for some seething criticism three years later. Dr Singh’s detractors said that he had done an ostrich and washed his hands off the matter totally. Dr Singh then clarified that what he meant by arm’s length was that his office shouldn’t be seen siding with any particular business house. What happened after that is best summarised in Dr Singh’s Rajya Sabha speech on February 24, 2011: “The record clearly shows that the then [Finance] Minister [P Chidambaram], while he initially had a different view which he communicated to me on January 15, 2008, subsequently consulted the telecom minister [A Raja] and the two ministers worked [on] an agreed formula on spectrum charges which was reported to me in a meeting on July 4, 2008.” The decision, he said, was in line with the Trai report of August 2007 that only 3G spectrum should be auctioned and the existing policy on 2G spectrum should continue.