New Delhi: The Congress-led United Progressive Alliance (UPA) government, in an effort to find its way out of a crisis that has now escalated to the extent of involving the highest elected office in the land, may agree to the demand of opposition parties to set up a joint parliamentary committee (JPC) to investigate the second-generation (2G) spectrum scam.
Meanwhile, in a related but independent development, India’s telecom regulator asked that the telecom ministry cancel 62 licences given to five companies allowed to enter the business of 2G wireless telephony in 2008 (the scam concerns allegations that this entry happened under favourable terms and was restricted to a favoured few). The Telecom Regulatory Authority of India (Trai) says its recommendation stems from the delay in launches by Etisalat DB Telecom Services Pvt. Ltd (formerly Swan Telecom), Unitech Wireless Ltd (Uninor) and Videocon Mobile Services.
And in yet another related but independent development, the Supreme Court followed up the demand it made on Tuesday, asking Prime Minister Manmohan Singh to explain his “alleged inaction and silence” over a complaint against former telecom minister A. Raja (the elected representative of the Congress ally the Dravid Munnetra Kazhagam, he resigned Sunday night).
The court asked solicitor general Gopal Subramanium to place on record Singh’s response to Janata Party leader Subramanian Swamy who made a complaint alleging that Raja had favoured certain companies in the allotment, resulting in a loss to the government. Swamy wrote to the PM on 29 November 2008, alleging corruption in the spectrum allotment and received a response only 16 months later.
That’s pretty much what the government’s auditor, the Comptroller and Auditor General (CAG), said in a report presented to Parliament on Monday (CAG puts the loss at Rs 1.76 trillion ).
Coming in the wake of allegations of graft over the organization of the Commonwealth Games (by a Congress functionary who has since been removed from his post, Suresh Kalmadi, albeit in his capacity as head of the organizing committee of the Games) and a scam involving the allotment, in Mumbai, of flats meant for war widows and war heroes to senior defence officials and politicians that resulted in the sacking of the Congress chief minister of Maharashtra, the 2G scam has roiled the UPA and the Congress.
Since 9 November, the opposition parties have kept up pressure on the government and prevented Parliament from functioning.
In an effort to stem the tide, the Congress will agree to the opposition parties’ demand for a JPC, said a cabinet minister from the Congress as well as two other members of the party. All three, who spoke independently, said that the government would, however, seek to set the start date for the investigation as 1998, when the Congress’ rival the Bharatiya Janata Party was in power as the largest constituent of the then ruling National Democratic Alliance (NDA). A JPC includes members of the treasury benches and the Opposition sanctioned by Parliament to investigate any subject of its choice and recommend action.
Interestingly, India’s telecom policy saw a key shift in 1999, with the government, after much lobbying by telcos, agreeing to move from a licence fee regime to a revenue share one. Most telcos had bid disproportionately high amounts that they were willing to pay as licence fee and the shift helped ease their financial burden. Some analysts also believe that this was the first policy change that contributed to a telecom boom. The second, interestingly, was in the early 2000s, again when the NDA was in power and involved allowing firms with fixed telephony licences to enter the mobile telephony business—a move that allowed Reliance Communications Ltd, or RCom (in a previous avatar) to enter the market and set off a price war.
One of the Congress members mentioned above (like the others, he did not want to be identified) said that the party had closed ranks behind Prime Minister Singh and wants a strong response to the Supreme Court, which, he claimed, had “crossed the limit”.
On Thursday, a Supreme Court bench comprising justices G.S. Singhvi and Ashok Kumar Ganguly asked the solicitor general for details of the correspondence between Swamy and the Prime Minister’s Office by Saturday. Swamy had written to the PM on 29 November 2008, alleging corruption in the spectrum allotment and received a response only 16 months later.
The next hearing in the case is scheduled for 23 November. A related case on having the apex court monitor the Central Bureau of Investigation (CBI) as it investigates the 2G scam, that was filed by the Centre for Public Interest Litigation, will be heard on Monday. Meanwhile, a CBI official, who asked not to be identified, said the agency would question Raja as well as some of his aides.
As for Trai’s recommendation, the government will now have to take a call on the cancellation of licences which would also mean that these telcos lose the fees paid for these. The 62 licences (each licence allows a telco to operate in one region or circle) under fire include 15 given to Etisalat, a company earlier known as Swan, eight to Uninor (a partnership between Unitech Ltd, whose subsidiary got the licences and subsequently formed a joint venture with Norwegian firm Telenor), 10 to Sistema Shyam Teleservices Ltd, a joint venture between Russia’s Sistema and India’s Shyam group, 10 to Videocon, which Venugopal Dhoot-led group acquired from Mahendra Nahta’s Datacom, and 19 of Loop Mobile.
Spokespersons of Loop, Uninor and Sistema Shyam said they were yet to hear from Trai and they were in compliance with all telecom regulations.
Shares in mobile operator RCom, mentioned in the CAG report as a minority shareholder of Swan that subsequently exited the company, closed down 4.9% on Thursday on a day when the Bombay Stock Exchange’s benchmark Sensex index gained 0.33%.
Shauvik Ghosh and Sahil Makkar of Mint and PTI contributed to this story.