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Tuesday, July 26, 2011

2G scam: PM smelled something fishy but stayed away, says Arun Shourie

Source: ET
Former telecom minister A Raja's statements in court has opened a new political battlefront, withBJP demanding the resignation of the Prime Minister and P Chidambaram, who was finance minister when the 2G spectrum allocation was made. The telecom minister during the NDA regime, Arun Shourie , has been tracking developments on the 2G trial. In an interview to ET , Shourie discusses what he believes the PM knew, going by the file notings, Raja's defence that he inherited the policy, and other related issues. Excerpts:

Are you inclined to believe Raja's statements that he did everything with FM's and PM's knowledge?

Raja was very clever. He wrote about 18 letters to the PM during the 2G episode. And in each letter, he implicated somebody. For instance in his letter on 7 November, 2008, he says, "kindly recall my meeting with you on 4/11/2008 along with the honourable Finance Minister in connection with3G spectrum auction and one time spectrum charges for 2G. During the discussion, you advised me to meet the press, to explain the policy and rules.

Accordingly, I addressed the issues in the press conference today and explained the related issues including the dilution of shares as explained by the Finance Minister, of Swan and Unitech." The same day he issues a press release, in which he repeats that this issue has been explained by the Finance Minister. "This matter has been discussed and clarified with the Finance Minister," the press release says, in which this portion is in bold!

Then the FM himself has said, yes, the PM asked me to examine this particular matter. He says I examined it, I said it is dilution of equity and it was consistent with policy and procedure. If that is the case, how is it that now, the Enforcement Directorate, which is under the same ministry, has slapped a 7100 crore penalty on Etisalat? For violation of FEMA!

If everything was done as per policy and procedure, then how? It now transpires, according to ED, that Etisalat was given permission to bring in money from UAE. But it, instead, brought in money from an unknown unit in Mauritius. Secondly, on the same day, Syed Salauddin, a close associate of Mr Karunanidhi, brought in 380 crore. He was allowed to bring it in as a domestic investor and he brought the money from UAE. He has also been slapped with a Fema notice. Both things happened in Swan on the same day.

So, is Raja on firm ground?

All these statements these lawyers like Kapil Sibal are making now, saying everything was in order and there was zero gain to the companies, are statements that will be used by these companies to defend themselves in notices. Kapil Sibal is not the lawyer for the PM, he is the lawyer for Raja and the companies.

It is not Raja who is dragging in the PM now. You go back to Sibal's first press conference on this matter. There he said Raja kept the FM and the PM informed at every turn. I had said at that time that this is the sentence that Raja will use. That is exactly what has happened. Now you wait and see. When the Telecom Minister says the companies made no gain, that will be their defence.
The PM had said in Parliament in February that the then FM and Raja had agreed on a formula and this was communicated to him. Raja says the equity dilution inSwan Telecom and Unitech was discussed and cleared with the FM before the PM. FM says the PM wanted to know if it was a case of dilution of equity or divestment. This shows that the matter that has caused the most outrage, that these two companies benefitted from enormous valuation for a license they paid the government very little for, was known to the PM and he did nothing about the policy that allowed these companies to do this.

All this is in the public domain. Priority lists have been changed, the basis of first-come-first-served had been changed, cut off date had been advanced and 500 applicants were reduced for favoured companies. It now turns out from the CBI chargesheet that the license applications of three companies were approved even before the policy was announced.

You mean to say rivals would not have brought it to the attention of TKA Nair (Principal Secretary to the PM) and others in the PMO? Do you mean to say the Intelligence Bureau and CBI and others would not have brought this to their attention? I cannot believe that. Because our system is so structured that the PM and his office gets to know about every sparrow that moves in the government. That I can testify from personal knowledge.

This was all in public domain...

The notings on the file indicate that the PM was quite alarmed at what was happening. These licenses were given on 10 January, 2008. On 11 January, the Principal Secretary notes that the PM desires to take into account the developments concerning the issue of licenses. This means perhaps that he wanted to have a meeting about it. The file is submitted back to the PMO on 15 January. Now see what the Principal Secretary notes.

"Prime Minister wants this informally shared with the department. He does not want a formal communication and wants PMO to be at arms length". Why would he give this instruction to his officers unless he knew that there is murky stuff going on and it is better to stay away. I think he had full knowledge and I think he had deep apprehension that something terrible has happened and his only concern was let's stay away from the filth. That is not what a PM is supposed to do.

You mean, he knew but shied away from taking any action?

This particular sentence, at arms length, very well describes Dr Manmohan Singh's attitude in regard to CWG, defence acquisitions and every other major decision. Weapons purchases are not happening because Mr Antony (Defence Minister) also wants to stay at arms length on every decision. I think this will be an apt title for a book on Dr Singh's tenure as PM - At Arm's Length.
Raja has also said that if the policy was wrong, all former telecom ministers must be jailed.

Raja says that he was following earlier policies but he flouted them. Take first-come-first-served (FCFS): He says I will FCFS. Then he disregards pending applications. If you were following the policy, you should have dealt with them first. Then he says I will have this cut-off date of October 1. After the applications are received, he says no, I will advance deadline to 25 {+t}{+h} September.

Then he changes FCFS. First, it was time and date of application received. And suddenly it becomes time and date of fulfilling the conditions in the letter of intent. Where is LoI? People rushed for it. It says, within 40 minutes, bring a banker's draft of Rs1,650 crore. Companies he favoured already has those drafts from Mumbai and sitting in his office. How could they get it in 40 minutes?

When he could not find adequate spectrum for his favoured companies, he changes the priority list in the Punjab and Maharashtra circles. You show me one single, unique, solitary instance during my period or anybody else's period during NDA when any of this would have happened. So yes, people who do wrong should be in jail and continue to be in jail without bail.

Thursday, July 21, 2011

The Weight of Love

Sun Jul 10 2011, 04:13 hrs

Arun Shourie writes about bringing up his son Aditya, afflicted with cerebral palsy for many years now, in his new book, Does He know a mother’s heart? (HarperCollins). Adit’s pain and that of the author’s wife Anita, who suffers from Parkinson’s disease, leads him to ask: how can there be extreme suffering if God exists? Suffering, he says, refutes religion. Exclusive excerpts:


Your neighbours have a son. He is now thirty-five years old. Going by his age you would think of him as a young man, and, on meeting his mother or father, would ask, almost out of habit, ‘And what does the young man do?’ That expression, ‘young man’, doesn’t sit well as he is but a child. He cannot walk. Indeed, he cannot stand. He cannot use his right arm. He can see only to his left. His hearing is sharp, as is his memory. But he speaks only syllable by syllable...

The father shouts at him. He curses him: ‘You are the one who brought misery into our home... We knew no trouble till you came. Look at you — weak, dependent, drooling, good for nothing...’ Nor does the father stop at shouting at the child, at pouring abuse at him, at cursing the child. He beats him. He thrashes him black and blue... As others in the family try to save the child from the father’s rage, he leaps at them. Curses them, hits out at them.

What would you think about that damned father? Wouldn’t you report him to the police or some such authority that can lock him up? Wouldn’t you try everything you can to remove the child from the reach of the father?

But what if the father is The Father — the ‘T’ and ‘F’ capital, both words italicised? That is, what if the ‘father’ in question is ‘God’?

Why does the perspective of so many of us change at once? Suddenly, they exclaim, ‘There must be some reason God has done this.’ Suddenly, they shift the blame to that poor child: ‘Must have done something terrible in his previous life to deserve such hardship . . .’

And yet the child loves. He laughs. He is filled with joy at the littlest things — a tape of Talat Mahmood, lunch at a restaurant, the visit of an aunt or a cousin... What are we to conclude? That the cruelties rained upon him by his father have ‘built his character’? That they have instilled forbearance? Are we to infer, ‘See, while to us the father seems cruel, in fact he never inflicts more hardship on the son than the son can bear’?

Were we to say and infer as much, that would be not just obnoxious, it would be perverse. And yet those are the exact things that, as we shall see, a revered religious text says about God: He inflicts hardship upon us to build our character; He never imposes more hardship on a person than the latter can bear.

But that child is our son — Aditya, our life. Adit is thirty-five now. He cannot walk or stand. He can see only from the left side of his eyes. He cannot use his right arm or hand. He speaks syllable by syllable. Yet he laughs — you can hear his laughter three houses away. He enjoys going out to restaurants. He loves the songs of Talat Mahmood, Mohammed Rafi and Kishore Kumar. There are some songs, though, the moment they commence, we have to rush and turn off the tape — he is so moved by them that he starts sobbing. There are others which he identifies with himself:Tu aake mujhe pehchaan zaraa Main dil hoon ik armaan bharaa . . .. . .Muskaan lutaataa chal Tu deep jalaataa chal Khud bhi sambhal Auron ko bhi raah dikhlaa...

‘Mere baare mein,’ he declares with joy — and laughs even more as in our rendering the last line has been altered to ‘Papa ko bhi raah dikhlaa...’

He loves these singers and their songs. He loves even more the tapes that his grandparents made for him, and the tapes that his uncles and cousins make for him now. He doesn’t watch television — moving images bother him. But he does listen to the news over the radio. The newspaper is read to him — among the things he calls himself is the ‘ghar kaa samvaad-daataa’. He loves poems being read to him. Seeing Adit’s spirit, and how many of his poems Adit knew by heart, Ashok Chakradhar has gifted him many of his books, and even dedicated one to him. Every time you read the books, you have to begin at the very first page, not just the title page, but the very first, blank page — for on them Ashok Chakradhar has written many an endearment —‘Pyaare, ati pyaare Aditya ke liye . . .’ And if, while reading the poems, you pronounce even a syllable wrong, he hoots with joy, ‘Galti’. That was one of my father’s favourite games with Adit. He would deliberately make a little mistake, and Adit would catch him out — hoot, and laugh, beaming with triumph... He loves everyone. Everyone in the family loves him. His maternal grandmother, Malti Shukla, was his life. He is ours.

And that God just does not stop pounding this helpless, defenceless child...

ADIT COMES

...A premature child. Barely four pounds. In distress. Placed in an incubator. As they could not locate a vein in his tiny arms, the doctors had stuck needles through his scalp... A horrible sight for us... His sugar level is not stabilising, some nurse came and said to us. ‘Will you please sign these forms for a blood transfusion?’...

Three days went by. A Pakistani lady doctor used to visit Anita to check up on her. I am not supposed to tell you, she said, and I will lose my job if they come to know I have told you, but something has happened. Insufficient supply of oxygen in the incubator...

Anita came back to our home in Alexandria. Adit stayed on in the incubator. For an entire month. A horrible month.

‘The child will finish your life as you have known it, may finish your life altogether,’ a senior at the World Bank said to me one day. He was a cheerful, warm-hearted person, but was speaking from first-hand knowledge as he had been bringing up a mentally handicapped son. ‘The doctors may well tell you, “We can do little more for the child.” And ask you, “Are you desperate that he lives?” When they do so, don’t let your emotions come in the way. Do you know what you will have to go on doing for the boy — not just now or for a few years but as long as the child lives?...’

That evening I reported the conversation to Anita and my mother-in-law. A person of iron-will, my mother-in-law said, ‘That is just not the case. Handicapped children live perfectly useful lives these days...’

Three months later we were advised to take the child to the head of paediatric neurology at the Georgetown University Hospital [in Washington]. We were exhausted, felled. The doctor was a kind, elderly gentleman. ‘I am going to use a word that you would have heard — it is used a lot these days to raise money. The word is cerebral palsy. It only means that the baby’s brain has suffered injury...’

We were too stunned to ask what exactly this was going to mean for our Adit’s future. I told the doctor, ‘We had planned to return to India. But if you feel that, for the sake of the child, we should stay on in Washington, of course we will. I will take back my resignation from the World Bank.’

‘I have not been to your country, young man,’ that kind doctor said. ‘If you are here, all that we will be able to do will be to tell you how your son is faring against the milestones. But as observant parents you will notice that yourselves...’

‘I have not been to your country, as I said,’ he continued. ‘But from what I have heard, you have strong, well-knit families there. That is what this child will need as he grows up — a net of love and security. So, if I were you, I would stick to your decision, return to your country, and bring him up in the embrace of your family.’

Among the wisest bits of advice we ever received.

We returned to India. We stayed with our parents. Soon, Anita’s mother came to stay with us...Adit became the centre of many lives.

THE SCHOOL

Adit was growing up. Shanti-amma, his maid, would sing to him, tell him stories, take him to the park. She was ever so possessive of him — always ticking off anyone who expressed the slightest doubt about Adit’s condition, or who uttered a word of pity or condescension. My mother-in-law would teach him — from news, to stories, to rhyming games, to poems, to arithmetic. ‘But why arithmetic, Mummy?’ I would remonstrate. ‘Why make him do sums? Why make him learn tables? He is never going to use them.’ ‘But just see his sense of achievement when he gets the answer right,’ she would teach me. ‘And he learns fast. He has excellent memory.’

….One day, as Anita was driving Adit and herself to school, a jeep coming in the opposite direction lost control. It rammed into Anita’s little Fiat. She and Adit were tossed inside the car. They were shaken, of course, but neither seemed to be badly hurt.

Soon after the accident, however, Anita began to feel peculiar sensations on her left side. We thought the problem was a ‘frozen shoulder’. But soon, the stiffness and pain developed into tremors... One doctor after another... Eventually she was diagnosed as having developed Parkinson’s disease. She was just about forty-two at the time — another one of those ‘one in ten million’ blows.

By now the tremors have spread to the right side also. Every time Anita does something with her hands — for instance, when she eats — her legs flail uncontrollably. That is dyskinesia, another one of those words with which our circumstances have enlarged our vocabulary. The symptoms became worse every winter. This winter — of 2009, in which I begin working on this book about Adit and her — Anita has fallen four times...

With my parents having passed away, with Maltiji also having gone, I am now the servant-in-chief, not just of Adit but of the two of them. The help of many friends and relatives sees us through the day. But more than anything, Anita’s strength and equanimity keep us afloat. ‘I had another toss today,’

I heard her tell her sister the other day, describing a fall so bad that we were lucky she had not fractured her skull. And so helpless and shocked was she that, while there was an alarm bell next to where she lay, she could not reach out to it. She now wears another alarm on her wrist... Even though this is her own condition, she manages the entire household; she husbands our savings; she runs everything so that every need of Adit is met — at once; and so that I am absolutely free to do my work.

‘We have to be thankful for an ordinary, boring, eventless day,’ Anita taught me long ago.

Her fortitude is a daily, ever-present example of another one of the lessons she taught me once: ‘You have to remember, there are many types of courage.’

My father’s courage as he evacuated Hindus in July-August 1947 out of Lahore — where he was City Magistrate at the time. The courage with which he settled, comforted and on occasion quelled the raging refugees in camps across Punjab. My mother’s courage as she comforted her mother and father when they lost a young son, as husbands deserted two of their daughters. My mother-in-law’s courage as she went on looking after all of us even as rheumatoid arthritis twisted and turned and crippled her hands and feet.

Malini’s courage, Veena’s courage evident in the dignity and fortitude with which they have borne blows of unimaginable severity, faced life, brought up their children single-handed, and, on top of it, continued working... Here we are: we get so puffed up just because we have stood up to some authority-of-the-moment. And here are these girls: they have stood up to life itself.

‘But I will never get over what God has done to Adit,’ Anita says. How true:Ghaayal ki gati ghaayal jaane Jauhar ki gati jauhar...

Copyright@Arun Shourie 2011

My publicity agent

Thu Mar 24 2011, 00:45 hrs


Another scam . . . Inquiry into disinvestment of VSNL” — the papers proclaim. The announcement has been preceded by stories along similar lines in two magazines, a planned build-up to the announcement.


The government does seem to have surrendered its judgment to a bully. And it will be sorry for it. But I will come to that in a moment. The charge is that as the minister of disinvestment in the NDA government, as part of disinvesting government equity in VSNL in 2002, I “gifted” 774 acres of prime land in four cities to the Tatas.

The facts are the exact opposite.

During due diligence of VSNL, it was discovered that the company had been buying land over the years. Technology had changed. It was now possible to provide the same services with infrastructure spread over significantly less land. VSNL, working with advisors, identified 774 acres of land as “surplus”, in the sense that it would not be needed in the future to provide the services for which VSNL had been constituted

Accordingly, in the agreements governing disinvestment, it was provided that whoever won the bid for the company would not get this land. The company was valued by excluding this land. Indeed, the article in the agreement was framed in such extreme terms that at one stage the potential bidders said that they would not go through with the bids at all. The officer who was handling the disinvestment — one of the strongest officers I had the good fortune to work with, P.K. Basu (now agriculture secretary) — told them to go home, and forget the disinvestment. The article would not be diluted one bit, he told them, disinvestment or no disinvestment.

Eventually, they came round and the disinvestment went through. It was one of the most hotly contested cases. On the one side was Reliance — Dhirubhai Ambani was still alive, and was calling the shots. On the other side were the Tatas. The Tatas won, by a whisker. That outcome firmly established the credibility of the disinvestment process. “Even Dhirubhai Ambani could not find out what was going on in your ministry,” observers told us.

The article that Basu and his colleagues incorporated is worth reading. It is a short one. It could have been accessed by anyone from half a dozen sources — but by now it is no surprise that sections of the media will deliberately not read!

Please read the article, and then I will set out its implications. Here it is:

4.7 LAND

(a) (i) The strategic partner confirms that it shall cause and procure the company to hive off or demerge the land into the resulting company pursuant to a scheme of arrangement in terms of the provisions of Section 391 to 394 of the act.

(ii) The strategic partner confirms its understanding that it will transfer all such shares in the resulting company to the government as it may acquire as a consequence of this transaction, that is a minimum of 25 per cent of the resulting company’s issued equity shares or a higher number which shall include shares in the resulting company that it may further acquire as a consequence of any further sale of the equity shares in the company by the government to the strategic partner, prior to the demerger, as part consideration of transfer of the transaction shares and any subsequent sale of the company’s shares by the government to the strategic partner, pursuant to this transaction.

(b) The strategic partner confirms that:

(i) it shall do and cause to be done all and any such acts, matters, deeds and things as are necessary, usual or expedient including voting in favour of the item of business relating to the approval of the scheme of arrangement to implement the hiving off or demerging of the land into the resulting company;

(ii) it shall not directly or indirectly do or cause to be done any acts, matters, deeds or things which may adversely affect or delay the hiving off or demerging of the land into the resulting company.

(c) (i) If for any reason the company cannot hive off or demerge the land into the resulting company then, subject to Article 5.6 (b) (iv) and (xiv) hereto at any time when the company sells or transfers the land or agrees to sell or transfer or otherwise develop the land, the strategic partner shall pay to the government within seven days of the sale or transfer of the land an amount equivalent of 25 per cent of the benefit accruing to the company pursuant to such sale or transfer or otherwise development of the land, as determined by the appraiser, after taking into account any impact under the Income Tax Act, 1961.

(ii) Subsequent to this agreement and the share purchase agreement, if the government sells more than 25 per cent of its equity shareholding in the company to the strategic partner, then the percentage of amount to be paid to the government by the strategic partner on account of sale or transfer or otherwise development of the land under Article 4.7(c)(i) shall increase in proportion to the percentage of such further sale of equity shareholding in the company by the government to the strategic partner. For the purpose of this article the term “transfer” shall include sale, lease, licence, grant of development rights or the parting of physical possession of the land or transfer of any interest, whatsoever, in the land.

The article provides, first of all, that whoever wins the bid — and there could have been no plan to pass on a favour to the Tatas, etc, for no one knew who would win the keenly contested bidding process — shall not get the surplus land. The excess land would be detached from VSNL. A new company would be formed, and the land would be transferred to it.

Second, that the shareholding of this new company would be what the shareholding of VSNL was before disinvestment. That is, the bidder who won would have no share in it at all. The government would have the proportion that it had before disinvestment — about 52 per cent. Employees would have the proportion they had. The rest — about 47 per cent — would be with the general public that held shares of VSNL, the company was listed in both India and the USA. In a word, a government company would be set up. And this government company would acquire the land.

Third, in case such a company could not be formed and the disinvested VSNL decided to part with the land, it would be able to do so only if the government agreed to the proposal. The reason for this was that, even after disinvestment, the government would continue to hold 26 per cent of VSNL’s equity. The sale of land, or disposal of any rights in an asset such as land, can only be done by a special resolution of the board and that resolution cannot go through unless the party that holds 26 per cent of its equity agrees.

Fourth, if that new company could not be formed for some reason, and if the government approved the proposal of VSNL to sell the land, the entire proceeds would be distributed in accordance with the pattern of shareholding that prevailed before disinvestment — that is, the winner would get absolutely nothing; the proceeds would be divided between government, employees and the general public in the proportions in which they held the shares before disinvestment.

There was a fifth factor which was especially important, as it caused the greatest heartburn among potential bidders. This is contained in clause (c) (ii) reproduced above. This clause provided that if government shed more than 25 per cent of the equity it was holding of VSNL, then the share of the proceeds that the disinvested VSNL and the winning bidder would have to pay to government out of any sale or transfer of land or rights in it would increase proportionately.

Sixth, the hands of the prospective bidders were tied tighter by incorporating a very comprehensive definition of “transfer”. The article had used the term “transfer” of land, etc. In the last sentence, it was provided that “for the purpose of this article the term “transfer” shall include sale, lease, licence, grant of development rights or the parting of physical possession of the land or transfer of any interest, whatsoever, in the land.” All proceeds from any form of transfer would go to the government and the original shareholders and not a penny would go to the successful bidder.

Finally, a series of interlocking clauses tied the prospective winner in perpetuity! Privatisation agreements have “call” and “put” options. That is, after a specified period — say, three years — the winner can “call” on the government to sell its residual shares. Similarly, the government has the right to “put” its shares for sale. But in the VSNL agreement, we provided that even if the government parted with all its shares through either option, it would always retain one share — known as “the golden share”; and that by virtue of this single share, all the rights it had in regard to the surplus land would remain with the government!

In other words, the agreement provided that neither the surplus 774 acres nor any right in them whatsoever shall go the bidder who succeeded in winning the contest. So, where does the minister get this notion, parroted by some magazines, that 774 acres were gifted to the Tatas?

“But why was the land not just taken out of VSNL before disinvestment?” the innocent ask. VSNL was a listed company — it was listed both in India and the US. If such a substantial asset was taken away, any shareholder could have gone to court and halted the whole process on the charge that his interests had been harmed. On the other hand, if it was not taken away, the government would be accused of making “priceless” land over to whoever succeeded in winning the bid. Hence a solution was devised: the land would be taken out of VSNL, but the interests of pre-disinvestment shareholders would not be impaired. The land would be turned over to a new company in which the shareholding pattern would be what it was before the disinvestment of VSNL. That was an excellent solution that Basu and his colleagues devised, and it has stood the test of time. The winner did not get the land. The shareholders did not go to court!

“But didn’t VSNL have enormous amounts of cash? Wasn’t this just handed over to the Tatas?” Yes, VSNL had a cash reserve. The fact is that this cash was drawn down before the company was disinvested. The government had VSNL declare a special dividend of 750 per cent! As a result, the winning bid along with this dividend secured for government a P/E ratio of 11 as against the measly 6 at which VSNL shares were trading before disinvestment.

When no other tack is left, critics are led to ask, “But why has the new company not been set up even though nine years have passed since VSNL was disinvested?” The fact is that the government and the winners — the Tatas in this case — tried to work out a solution. The attempts couldn’t get past disagreements. For instance, the Tatas said that as the land did not belong to them, and as it was to be transferred to a company that would in essence be a government company, the government should pay the stamp duty that would be incurred in such transfer. Similarly, as the monopoly of VSNL in regard to international calls had been curtailed by two years, a compensation package was announced by the government. They felt that this was inadequate. As the issues could not be resolved, they proposed that the matter be referred for arbitration. I had no problem with that proposal, but my colleagues in the ministry correctly counselled that as the proposal had revenue implications, we should send it to the finance ministry. That is what was done.

The government changed. Since then, I see from what has appeared in public that the Tatas kept writing to the government requesting the latter to settle the matter. They wrote that there were three alternatives, and that any one of the three would be acceptable to them. The government — the UPA government, that is — kept saying that it was examining the issues and would get back to them. It did not.

Kapil Sibal says this delay has been very costly to the people of India, and that is why he has ordered an inquiry. I say — “Bravo! Excellent!” He should institute an inquiry into the conduct of ministers whose negligence has cost the country so much.

The ministers? P. Chidambaram and Pranab Mukherjee, the finance ministers of the UPA governments! For, remember, the department of disinvestment has been under the finance ministry since the UPA formed its government in 2004. Maybe they are the real targets of this buccaneer? No?

Why else would Kapil this time round entrust the inquiry not just to a handpicked judge but to a handpicked officer working directly under him?! As for me, far from being my inquisitor, Sibal is my publicity agent! He keeps me in the news. And gratis!

The writer was Union minister for telecom and for disinvestment in the NDA government

The Great Telecom Fudge

Thu Mar 10 2011, 18:01 hrs New Delhi:

‘Taan Shourie Saab, hun ki karn da irada hai?’ Giani Zail Singh asked. So, what do you plan to do now?


There had been another turn in my life. I had gone to call on Gianiji.

Sir, ki karana? Kitaabaan hi likhniyan. Kitaabaan likhanga’ — Sir, what is there to do? I will write books, I said.

Naeen, naeen,’ No, no, Gianiji said, ‘Tuseen samjhe hi naeen’ — You haven’t understood. ‘Siyaasat badi kutti cheez hai’ — Politics is a real bitch. ‘Jadon audaa hoye, taan yaar naeen chchadan dinde’ — When one has a post, one’s friends don’t let one leave it. ‘Jadon audaa hathon nikal jaave, taan dushman naeen chchadan dinde’ — And when one loses the post, one’s enemies don’t let you leave it!

I have been reminded of Gianiji’s prescience in the last few months. For the last year, I have been living far away from Delhi, immersed in religious scriptures for a book that I have completed. Telecom has been as far from my concerns as any other gutter in Delhi. It is the spate of lies which has been let loose that has compelled me to return to it. 

The falsehoods have been spread to divert attention from what are the two central issues. Who made the money? What were the heads and controllers of the Government doing when this loot was going on? Hence, ‘NDA’, ‘first come first served’, 2003, 1998... And, given the fact that media, etc. do not read documents, given that few would today remember what the condition of the sector was at that time, the Government has all but succeeded: ‘there has been no loss’; ‘in any case, it was only Raja who was doing something wrong, and we have already removed him’; ‘in any case, he was just following NDA policies’ ...

As fabrications have been put out, I will set out the facts that relate to the time that I was in charge of the Communications Ministry — from early 2003 to April 2004.

The sector at that time

When I was put in-charge of the Ministry, the sector was marred by the following features:

[A] The sector had all but collapsed after the excessive bids; the decision to shift to a Revenue Sharing Model had rescued it from collapse; but the sector was yet in a very precarious condition.

[B] Today, there is a rush for licenses; at that time few were coming forward to enter the sector or to extend the coverage of the services that they were providing. This is evident from the following table:


Hence, one of the principal objectives of Government was to steer the sector on to a growth path.

[C] Such services as were being provided were concentrated in the relatively well-to-do parts of the country. This had led to a lot of acrimony in the ill-served areas and to criticism in and out of Parliament — namely, that telephony was being converted into a service for the elite and the rich living in just some favoured parts of the country. It had also reinforced deep resentment in areas such as the Northeast and J&K — in these areas the lack of service was taken as further proof that the Centre did not care for them and was actively discriminating against them. In fact, apart from BSNL, no Operator had come forth to provide services in the J&K circle. In some circles (like Assam, Bihar, North East, Orissa, MP), there was only one licensee or the second Operator had taken the license but was providing next to no service. There was not much growth even in Kolkata. Circles like Bihar, Haryana, Rajasthan, Punjab, UP (East), were also suffering from slow growth.

One of the principal concerns of Government, therefore, was to extend communications services to these under-served areas.

It is in this context that the figure that is being touted about — that 28 licenses were given by the NDA in 2003-04 — should be seen: not one of these 28 licenses was for lucrative circles or metros. The distribution of the licenses was as follows:


[D] The sector was paralysed by litigation: the CDMA Operators and the GSM Operators were at each others’ throats. Almost nothing could be done and it would be challenged by one side or the other in TDSAT, the High Courts and the Supreme Court. The Operators would file cases not just against each other but also against the Government. Indeed, even the expectation that Government was considering a course of action would trigger one side or its rival to rush to the courts and obtain a stay. Two examples will suffice. A Group headed by the then Minister of External Affairs and Electronics, Mr. Jaswant Singh, had been constituted in the late 1990s to make recommendations for a New Telecom Policy. It had to get a special study done on ‘Possible Litigation Scenarios’. The exhaustive paper was considered by the entire Group in its sixth meeting held on 22 March 1999. Similarly, no sooner had the Cabinet decided to integrate the Limited Mobility and Full Mobility services, the GSM Operators had moved the Supreme Court to stay any order that the Government may issue in this regard.

A major concern of the Government, therefore, was to lift the sector out of this quagmire of litigation. Telecom service providers should compete for the goodwill of the customers rather than trying to block each other in courts, or by suborning ministers and civil servants in Delhi — that was the objective.

[E] One of the reasons for this litigious and paralyzing situation was the complexity of the licensing system at the time. The plethora of licenses had grown as a coral reef over the decades. They differed by the date on which they had been obtained; the type of service the Operator provided; the location at which the service was provided; the distance over which the service was provided; the technology that was being used to provide the service; the type of customer to whom the service was being provided . . . This had two consequences: (1) It triggered litigation; (2) Every decision was seen by one side or the other as discriminating against it. [In a lecture that I delivered at the time, and which the Indian Express published, I described the situation in regard to the licensing system as I found it. The text can be easily accessed today as it is reprinted in my book, Governance, The sclerosis that has set in, ASA, Rupa, 2004, pp. 69-92.]

On the other hand, it was becoming clear by the day that the licensing system was being rendered obsolete by the advance of technology. This was specifically noted in the 1999 Telecom Policy. In its Paragraph 1.3, the Policy had stated, inter alia,

‘In addition to some of the objectives of NTP 1994 not being fulfilled, there have also been far reaching developments in the recent past in the telecom, IT, consumer electronics and media industries world-wide. Convergence of both markets and technologies is a reality that is forcing realignment of the industry. AT one level, telephone and broadcasting industries are entering each other’s markets, while at another level, technology is blurring the difference between different conduit systems such as wireline and wireless. As in the case of most countries, separate licenses have been issued in our country for basic, cellular, ISP, satellite and cable TV operators each with separate industry structure, terms of entry and varying requirement to create infrastructure. However, this convergence now allows operators to use their facilities to deliver some services reserved for other operators, necessitating a relook into the existing policy framework. The new telecom policy framework is also required the facilitate India’s vision of becoming an IT superpower and develop a world class telecom infrastructure in the country.’

This is why the Government set up the Group on Telecom and I.T. Convergence in 2001. The way that technological advance was cutting the rationale of the licensing system, and also the way that the licensing system, in turn, was holding back the adoption of newer technologies and thereby harming the interests of consumers and the country were the major themes of the TRAI report of October 2003. These were also among the principal reasons on account of which TRAI recommended that Government should replace the plethora of licenses with a Unified License.

Three further facts should be borne in mind.

[F] First, in those days, spectrum was given as a part of the license: the licensee got the license, and the Government in turn undertook to allow him use of a start-up quantum of spectrum to provide the services for which he had got the license. Subsequent tranches of spectrum were to be released when the subscriber base crossed certain specified limits.

[G] Second, while we had been able to establish the bidding route firmly in Disinvestment, and for which reason I was keen to introduce it in the Telecom sector also, the experience with bidding in the latter had not been altogether a happy one:

* When the sector had been first opened up and private Operators had been invited to bid, they had filed grossly excessive bids as a result of which the sector had all but collapsed, and had to be rescued by abandoning altogether the obligations that ensued as a result of the bids.

* The fourth Cellular Licenses were given as a result of multi-stage bidding process in 2001. By 2003, the teledensity had not changed much since the bids in 2001.

* As several areas of the country had not been taken up by any Operator when the bids were invited for the 4th Cellular Operator, in March 2003 bids were again invited for these areas. But it became evident that not a single bid was going to be received. At considerable discomfiture, the Government had to call off the entire exercise.

[H] Terrorism had become a major problem. Grave apprehensions had developed among intelligence agencies that the spread of mobile telephony will enable terrorists to carry out their plots even more readily.

Government’s strategy

In view of these circumstances, the Government’s strategy became:

* Accelerate growth;

* In particular, in the under-served areas;

* But at the same time, meet the concerns of the intelligence agencies;

* Once telephony grows, spectrum will become a scarce resource; for this purpose

* Take measures that will make more spectrum available for civilian use;

– Devise a fair and transparent modus for distributing spectrum for the time it would have become scarce;

– The modus adopted should also ensure optimal usage of the spectrum;

* Pull the sector out of the mire of litigation and allegations. Operators should compete in the market not in courts and government offices.

* The licensing system should be simplified. In particular, it must be service and technology neutral, and it should spur the adoption of the best and latest technologies that would benefit the consumer.

Means for implementing the strategy

We decided to use a series of instruments to achieve these objectives:

* Unleash and enable BSNL/MTNL to provide intense competition to private Operators: in particular, (i) to spur them to extend coverage to under-served areas; (ii) to offer new services; (iii) to lower the exorbitant tariffs they were charging;

* Lower the Revenue Share being taken by Government;

* Unify licenses, eventually instituting a single unified license:

– To ensure competition, this should be given quasi-automatically: TRAI came to use the expression ‘automatic authorization’;

– Keep the entry fee at a minimum;

* Anticipate the situation when spectrum will become scarce. Hence,

– Commence work that is required for eventually delinking licenses from spectrum, and auctioning the latter;

– Allocate Rs. 1400 crore to Defence Forces — this was their estimate of what they needed — so that they may modernize their signaling equipment, and thus free excess spectrum for civilian use;

– Devise incentives for optimal use of the spectrum and penalties for its inefficient use: existing inefficient use of what would become a scarce resource if the growth that it was projecting would materialize, was ‘of utmost concern’ TRAI observed, and hence it emphatically recommended that these incentives and penalties be devised. [See, for instance, Para 7.30 and Annexure IV of its Report of October 2003. These reports are all available on the website of TRAI.]

* Ensure that every thing is done so openly and with such manifest fairness that litigation ceases.

It is a matter of great pride that these steps indeed more than fulfilled the objectives that Government had sought to pursue:

a) From a situation of near collapse, the sector set on to a course of massive growth: this has made a major contribution to growth — could the IT sector have become what it is today without the growth that we have recorded in the telecom sector?; it has generated large employment; it has helped integrate the country further;

e) From being a rich man’s toy, the mobile has become an adjunct of everyman’s daily life. It has enabled the poorer craftsmen to improve their businesses. It has enabled migrant labour to keep in touch with their families. In a word, it has been a boon to the poor as much as to anyone else.

f) At that time, Operators used to charge Rs. 28 to 32 per call — both the caller and the person called had to pay. Today, our rates are the lowest in the world.

g) At that time, our teledensity was far below the world average. Today, the Indian telecom network is the second largest network in the world, and the fastest growing network in the entire world. In 2002, the mobile density was 1 per cent. Today it is 70 per cent. In 2002, the country was adding 2 lakh subscribers a month. Today, it adds close to 20 million subscribers every month. This is one sector in which targets set by Government have been exceeded manifold: the Plan target for 2010 was exceeded by 300 to 400 per cent; rural connectivity targets were exceeded by 400 to 500 per cent. This happened because of bold decisions of Government, the growth-oriented approach of the Regulator, the alacrity with which Indians adopt to new ways and things; most of all, it happened because of the entrepreneurship of several Operators, an entrepreneurship which the policy decisions of those days unleashed. Contrast the way the country has always fallen woefully short of targets in the power sector, a sector in which corresponding decisions have not been taken and implemented.

h) At that time, the sector was mired in a host of legal cases — with private Operators fighting each other, with all of them challenging every decision of the Government; litigation was brought to an end.

i) The Government used to spend an amount close to Rs. 20,000 crore every year for growth of telephone services in the country. Now, the telecom sector is contributing to the Exchequer more than Rs. 50,000 crore every year by way of licence fees, spectrum charges, service tax and other corporate taxes.

That this entire transformation is the result of policies adopted during the NDA period is evident from the repeated affirmation of the current Minister of Communications, and none other than the Prime Minister that the UPA has just followed policies of the NDA Government!

How people are sought to be misled

‘It is Arun Shourie who introduced the first-come-first-served principle. Raja merely followed it,’ Government spokesmen have been declaiming again and again.

Typical of the devices that these people specialize in deploying, it is a red-herring that has been thrown in the way to lead everyone away from the central fact: Raja followed no principle, no procedure, no policy. He certainly did not follow the first-come-first-served procedure:

* There were 167 pending applications. Under first-come-first-served norm, these are the ones that would have been dealt with first. He just discarded this norm, and called for new applications.

* On 24 September, 2007, he announced that the deadline for receiving the applications would be 1 October, 2007. There was a spurt of applications: 408 were received.

* Under Raja, the DoT announced that these would be considered on a first-come-first-served basis.

* Months later, he arbitrarily changed this to 25 September and thus eliminated a slew of competitors. This edict cut out the applications from 575 [the 167 that were pending and the 408 new ones that were received] to 232.

* Next, he changed the basis of adjudging the order in which applications would be considered: the basis was to be the date and time of receipt of application; he now ruled that it shall be the date and time of fulfilling the conditions that were being specified in the Letter of Intent. Among these conditions, as the CAG has pointed out, was the condition that the applicants bring a banker’s draft of Rs. 1650 crore within 41 minutes. The favoured companies had prior knowledge that this would be one of the conditions, and hence had come with the drafts. Others were physically assaulted and prevented by musclemen from accessing the office.

* As even these manipulations did not secure for Swan and other favourites the quantum of spectrum which had been agreed upon, Raja changed the priority list in circles like Punjab and Maharashtra.

Is this the way the first-come-first-served principle is adhered to? Indeed, does this sequence betray that he and the UPA Government were adhering to any principle at all?

The first-come-first-served principle has been in vogue for long, certainly before the time when the Ministry was put in my charge — in fact, I would be surprised if the Prime Minister with his intimate acquaintance with the license-permit raj does not remember that there was a time when such norms were used to allocate licenses for a host of things: from railway rakes to imports. Here are just three examples of documents in the telecom sector that refer to it:

* Guidelines for Issue of Licence for Basic Service [No. 10-2/2000-BS-II, Ministry of Communications, Department of Telecommunications , Licensing Cell (Basic Service Group), Sanchar Bhavan, New Delhi, dated 25th January, 2001.] Clause 26 of this document reads in part: ‘. For Wireless Access Systems in local area, not more than 5+5 MHz in 824-844 MHz paired with 869-889 MHz band shall be allocated to any Basic Service Operator including the existing ones on first come first served basis. The same principle shall be followed for allocation of frequency in 1880-1900 MHz band for Micro cellular architect based system.

The title of the next document itself is Procedure for Allocation of Spectrum on First Come First Served Basis, [No: 10-2/2000-BS-II, Ministry of Communications, Department of Telecommunications, Licensing Cell (Basic Service Group), Sanchar Bhavan, New Delhi, dated 23rd March, 2001]. Apart from the title itself, Para 1 of this document states, ‘As per Guidelines issued for Basic Telephone Service providers, the spectrum for WLL service in the frequency of 824-844 MHz paired with 869-889 MHz is to be allocated on first come first served basis.

And, remember that, at that time licenses and spectrum were joint-twins: so it is not that this principle was confined to spectrum and had nothing to do with licenses.

Later that year, The Group on Telecom and IT Convergence submitted its 'Report on Limited Mobility'. The Group was headed by the then Finance Minister, Mr. Yashwant Sinha, It elucidated the meaning of the principle ‘first come first served’ in regard to allocation of spectrum. Para 25 of this Report stated as follows:

‘25. The Group noted that the description of “first-come-first-served” used in the Guidelines of January 2001 was not an accurate description of the content of policy as announced and as implemented with reference to existing Fixed Service Operators. It does give the impression that immediately on application the applicant would become eligible for a spectrum license, whereas in fact the Guidelines — especially when read with the spectrum allocation procedure of 23rd March 2001, which stipulates the conditions under which the spectrum would be allocated — clearly require that the Operator seeking spectrum must have established a Point of Presence (POP) in an SDCA in order to be eligible for the first tranche of spectrum; further installments of spectrum being given subject to fulfillment of roll out obligations which would include the obligation now mentioned in this advice, and to ensure that the spectrum already given has been optimally utilized. The 23rd of March, 2001 Procedure also stipulates that in the event of roll out obligations not being fulfilled the spectrum allocated would revert back to the Government. Hence, “first-come-first-served” on a true interpretation only means that allocation of spectrum is and must be considered inextricably linked to performance. The Group noted that the quantum of spectrum to be allocated to the fixed service providers for WLL with limited mobility is in accordance with the recommendations of TRAI.’

Each of these documents is from 2001 — two years before I was given charge of the Ministry. In a word, ‘first come first served’ was a well-established and recognized method of processing applications.

Here is another example — this one from TRAI whose recommendations everyone are always holding up as if we violated them. In the Report, Recommendations on Unified Licensing, that TRAI submitted in October 2003, in Para 7.29, it stated, inter alia, ‘... The allotted spectrum varies from 4.4+4.4 MHz to 10+10 MHZ depending upon the number of subscribers in each service area. Existing BSOs [Basic Service Operators] shall be allocated 5+5 MHz in 824-844 MHz paired with 869-889 MHz bands on a first come first served basis. The same principle shall be followed for allocation of frequency in the 1800-1900 MHz band.’

[E] In contrast to what happened during Raja’s time — when the Finance Ministry repeatedly objected to what he was proposing to do — during the time that the Ministry was under my charge, no objection was ever raised by the Finance Ministry. In particular, the record on file establishes that the Member (Finance) — who represents the Finance Ministry on Telecom affairs — specifically approved the decision that the first-come-first-served principle shall be observed. By contrast, during the UPA tenure, the then Member (Finance) was so outraged by what Raja was doing that she sought premature retirement and left Government service all together.

And it was a perfectly reasonable principle. Two points are noteworthy. As will be obvious, for instance from the extract given above from the Group headed by Yashwant Sinha, it was never the sole criterion: the applicant was to have fulfilled a number of other requirements. Only after the competitors had fulfilled these criteria, would the first-come-first-served criterion come into play. And these requirements were known to all at the time they submitted the applications. They were not injected ex post facto as in Raja’s tenure. Second, it was a necessary and entirely open and fair criterion: consider a situation in which two operators have fulfilled the requirements — for instance, regarding establishing Points of Presence, and getting the specified number of subscribers; but Government has at that moment spectrum that is sufficient to meet the operational requirements of just one of them. How would it choose between the two? On the basis of which of them came to it with evidence of having fulfilled the other criteria first. What could be fairer? What could be more open?

Cabinet decision and what DoT did

One of the fabrications that has been put out is that during the time the Ministry was in my charge, it exceeded what Cabinet had authorized us to do. Forget my personal temperament, the fools who put out such a lie should remember that that was not the Cabinet of Manmohan Singh. It was the Cabinet of Atal Behari Vajpayee — the slightest excess would land one out of the Government. And he had as his Principal Secretary, Mr. Brajesh Mishra, one of the most powerful and most effective Principal Secretaries that any Prime Minister of India has had. He kept a hawk’s eye over whatever was happening in departments of Government. It is beyond imagining that a decision of Cabinet would be violated — and that too in such a contentious sector — and the contenders — the private Operators who were always rushing to court — would not raise Cain; that Mr. Mishra would not know; and that Mr Vajpayee would condone the transgression.

The Cabinet decision is clear as can be. In its meeting on 31 October 2003, the Cabinet had decided as follows:

‘The recommendations of TRAI with regard to implementation of the Unified Access Licensing Regime for basic and cellular services be accepted.

‘DOT be authorized to finalise the details of implementation with the approval of the Minister of Communications & IT in this regard including the calculation of the entry fee depending upon the date of payment based on the principles given by TRAI in its recommendations.

‘The recommendations of TRAI in regard to the course of action to be adopted subsequently in regard to the implementation of the fully Unified Licensing-Authorization Regime be approved.

‘DoT be authorized to finalize the details of implementation with the approval of the Minister of Communications and IT on receipt of recommendations of TRAI in this behalf.’

The Cabinet decision clearly recognized that, as recommended by TRAI and by the Group of Ministers, the process of implementation would be in two phases. In the first phase, the Unified Access Licensing Regime would be introduced: that is, the licenses that had been differentiated by technology — CDMA vs. GSM — and range of service — limited or full mobility — would be unified. In the second phase, after recommendations of TRAI in regard to a fully Unified Licensing Regime had been received and approved by Cabinet, that Regime would be introduced. In both phases, the details of implementation of the UASL regime and of the fully Unified Licensing Regime were to be worked out by the Department of Telecommunications with the approval of the Minister of Communications and IT.

2. The implementation action was taken in the background of the following aspects of the TRAI recommendations which had also been accepted by the Cabinet [Para numbers in the following refer to the TRAI Report of October 2003, which can be readily accessed on its website]:

(i) Within six months ‘Unified Licensing’ regime should be initiated for all services covering all geographical areas using any technology. (Para 7.1)

(ii) Unification of access services at circle level [a ‘circle’ roughly coincided with a state] should be taken up forthwith: for this consultations with various stakeholders had already been completed. This should be without delay followed up with steps to set out the guidelines and rules for Fully Unified Licensing/Authorization Regime by gathering details of international practices and through the consultation process. (Para 7.6)

(iii) To determine the benchmark of the entry fee for the UASL regime — that is, the interim period before the fully unified licensing regime is ushered in — TRAI had considered the option of inviting bids from existing as well as new prospective players. It had concluded explicitly and emphatically that this option should not be adopted. TRAI had advised that this option would be time consuming and that it would delay the implementation of Unified Licensing. TRAI recommended that instead the existing entry fee of the Fourth Cellular Operator be accepted as the basis for fixing the entry fee for migration to Unified Access Licensing regime for Basic and Cellular services at the Circle level. (Paras 7.16 to 7.20) This was an eminently logical proposition: the mobile density in 2003 was just about the same — a miserable 1 per cent — as it was in 2001 when that price had discovered through multistage auctioning.

(iv) TRAI had stated that it would give its recommendations on efficient utilization of Spectrum, its pricing and Spectrum allocation procedure in the near future. DoT was to issue spectrum related guidelines based on the recommendations of TRAI after receiving those recommendations. (Paras 7.28 & 7.29)

(v) TRAI had stated that it was not in favour of high spectrum pricing since such a regime would make the services more expensive and the desired growth would not take place in telecommunications. (Para 7.33)

(vi) It had advised that the formulation of an appropriate environment for growth, regulation and strategy had to be based on the single priority of the moment, viz. increasing the availability of phone connections at affordable costs and tariffs and ensuring a rapid roll out of services. Growth of teledensity, it said, revolved around developing access networks and making access to them available at low cost. (Para 6.2)

(vii) To achieve 100 million wireless subscribers, TRAI estimated that an investment of the order of Rs. 50.000 crores would be required. It said that for investment of this order to come forth, the prerequisite was that the sector be freed from litigation. (Para 6.5)

(viii) TRAI recommended that induction of new cellular mobile operators should preferably be done under the ‘Unified Licensing Regime’ which it expected to come into being soon after it finalized its recommendations on the matter. (Para 7.37)

(ix) Yet two paragraphs later, TRAI recommended that, if adequate spectrum was available, then in the existing Licensing Regime, Government may introduce additional players through a multi-stage bidding process as was followed for the Fourth Cellular Operator. (Para 7.39)

The words ‘existing regime’ referred to the pre-UASL regime — for that was the regime that was existing at the time that the Report was submitted in October 2003.

3. Thus, as will be evident from both — the recommendations of TRAI and the decision of the Cabinet — the UASL regime was a transitional phase. It was to be the first step towards putting in place a fully Unified License Regime.

4. During this transitional phase, the DoT was to proceed with its usual duties using the price paid by the Fourth Cellular Operator as the benchmark.

5. The Cabinet never intended that the Department should halt all expansion of services and, to take one instance, leave the under-served and unserved areas of the country in a state of neglect. Nor did the Cabinet, to take another instance, put any bar on giving Basic Service licenses. What happened as a consequence of its decision was that an addendum was added — nothing was subtracted from the NTP of 1999 — and two additional categories were introduced: henceforth, the DoT could issue licenses not just for Basic Services, NLD, ILD, etc. It could in addition issue UASL and Unified Licenses.

6. Subsequent events showed the wisdom of this decision — for, in the event, TRAI took not six months but one and a half years to finalize its recommendations regarding a fully Unified Licensing Regime: by that time the NDA Government had long gone. And in the Report that TRAI eventually gave in 2005, there was no recommendation for multi-stage bidding at all. Had the Cabinet directed the DoT to stop all further steps for extending services, the sector would have been per force frozen for over a year and a half — and that on the basis of an imagined recommendation that TRAI itself did not reiterate in its subsequent Report on the matter.

7. No sooner had the Cabinet decided to introduce unification of licenses, the Cellular Operators filed an application in the Supreme Court seeking a stay on the implementation of UASL regime. This application became part of the Appeal that had been filed earlier by the Cellular Operators against the TDSAT order of August 2003 in the Limited Mobility Case. Implementation of the Cabinet decision therefore required careful handling of the litigation before the Supreme Court. DoT accordingly proceeded with the following objectives in mind: (a) ensure that the decision of the Cabinet regarding the UASL Regime is not stayed as a result of the petition of the Cellular Operators; and (b) implement the UASL Regime in so transparent and fair a manner that the sector indeed becomes litigation-free. Through the Law Ministry, the services of the then Solicitor General were availed of by the DoT for handling this matter.

8. Implementation of the Cabinet decision then proceeded as follows:

(i) Since there were pending applications for Basic Service Licenses, these were dealt with in accordance with the usual procedure. Tata Teleservices had applied for providing Basic Service in four service areas in early September 2003. Letters of Intent were issued against these applications in the normal course for Basic Services on 7 November 2003.

(ii) On legal advice, including that of the Solicitor General, in the Guidelines for issue of UASL’s resulting from migration, it was provided that all new applications for Access Services would be in the UASL Category. The rationale for this was manifest: issuing of Service based licenses, as was the practice till then, would have perpetuated the very aberrations which were sought to be corrected by the UASL Regime that the Cabinet had directed the DoT to implement. These Guidelines were issued on 11/11/2003. This meant that henceforth neither applications for Basic Services nor from new cellular mobile Operators would be entertained. The new operators for access services could only be of the UASL category. Going in for bidding for the new UASL’s would have required determination of slots for auction in each service area in the CDMA technology and separately for those involving GSM technology. The bidding process would have been time consuming. Government also had before it the fate of the bidding process that it had initiated as recently as March 2003 when bids had been invited for the vacant slots for the Fourth Cellular Operator, based on GSM technology, no bids had been received and the process had to be cancelled at the last moment. The main reason for this lack of response was evident to Government: the Telecom Sector had got entangled in litigation and, except for the existing lot of Service Providers, new entrants were not forthcoming.

(iii) There was another very important aspect which could not be ignored. Had all further permissions been stopped, and Reliance had proceeded to migrate on the basis of the Cabinet decision of 31/10/2003, Government would have been opened to the charge that it had favoured Reliance by blocking its competitors. Apart from being manifestly unfair, such an outcome would have definitely resulted in the Courts staying the UASL Regime.

(iv) Para 7.39 of the TRAI Report regarding multi-stage bidding process related to the introduction of additional cellular operators under the pre-UASL regime. If it had been intended for new UASL operators, it would have been worded differently and the words ‘existing regime’ would not have been used. Thus there was no violation of the Cabinet decision in this regard.

It is in this background that clarification was sought from TRAI by the then Secretary DoT about how pending applications, applications from existing Operators who may opt to migrate, and new applications for UASL’s were to be dealt with. Chairman TRAI and the Regulatory Authority as a whole put the position beyond doubt.

The entry fee recommendation which was benchmarked to that paid by the Fourth Cellular Operator and which had been adopted for the purpose of migration in November itself, had to be used for others also — otherwise the latter would at once get a ground for charging the Government with tilting the playing field in favour of one or some Operators. This was a very important consideration. Even the majority of TDSAT in its judgment delivered as recently as August 2003 had held that, while the introduction of limited mobility had been legal, it had upset the level playing field. Tata-Teleservices were the major competitor of Reliance, and the Cellular Operators, namely Bharti and Hutch, who had applied for new UASL’s. Neither set would, and with eminent justification, have reconciled to anything which would have put them at a disadvantage vis-a-vis Reliance. On this basis, in accordance with the recommendations of TRAI, a procedure was adopted for dealing with applications for new UASL’s, and the new applications, which were few in any case and which were from Operators with great experience in the sector. TRAI had made it clear that this procedure was to be followed for an interim phase, till Guidelines for spectrum were finalized in the future.

That TRAI recommendations covered applications from both existing limited mobility Operators who were migrating as well as new applications is evident from the repeated references in the communications of TRAI to both categories. Similalrly, consider the last exchange on this subject — about the application for West Bengal and Andaman and Nicobar Islands: this was to be a new license. TRAI reiterated its recommendation.

And the communications were from the Authority as a whole. By no stretch of imagination can they be dubbed as private letters from the Chairman in his individual capacity. This is evident from the Agenda item dated the 17th November 2003 for the meeting of TRAI. It is evident from the communication of the Secretary and Principal Advisor of TRAI dated 19 November 2003. And it is evident from the communication of TRAI dated 5 December 2003 in regard to West Bengal and Andaman and Nicobar Islands. I have just not been able to fathom how responsible persons — who have had access to these communications — have suppressed them from public knowledge and made out that the Chairman of TRAI and the Secretary of Telecom Department entered into some surreptitious, private conspiracy to grant licenses to TATAs or Bharti or someone else.

The procedure adopted and the decisions taken were so manifestly fair and transparent that there was no controversy or allegation by anyone of any discrimination. No one challenged the approach or decisions in any Court. There was no criticism in the media.

All this in a sector that had been marred by acrimonious allegations and litigation.

And who got the licenses and for which areas? Some Swan? Some real estate racketeer?

The licenses

The procedure adopted for grant of new UASL’s was simple and straightforward. The entry fee payable was based on the same principles as were followed for migrating from Basic Services to a UASL. In November itself, Reliance migrated in 18 Service Areas; Tata-Teleservices in 6 areas; Bharti, HFCL and Shyam in one area each.

Tata-Teleservcies surrendered the Letters of Intent for Basic Service Licenses that had been issued to them on 7/11/2003. They applied for UASL’s for providing services in Haryana, Kerala, Punjab, and UP (West).

Tata-Teleservices applied for UASLs in 8 service areas on 12/11/2003. These were Bihar, Orissa, Rajasthan, Madhya Pradesh, Himachal Pradesh, Kolkatta and UP (East). These were all underserved and unpopular areas with very low tele-density.

Bharti applied for UASLs 6 service area — namely Bihar, Orissa, Rajasthan, UP(East), West Bengal including Andaman and Nicobar Islands, and J&K. Once again, all these were underserved and unpopular areas with very low tele-density. Out of these service areas:

* In the Jammu & Kashmir circle, apart from BSNL no other Operator had ventured forth to provide services.

* While, Bihar, Orissa & West Bengal circles were offered during 2001 auction, no bidder had expressed any interest.

* In March 2003, DoT had again tried to auction these service areas. As it became evident that there would be close to nil response from possible Operators, the auction process was abandoned at the last moment.

* A glance at the teledensity in the circles for which licenses were given will show how the situation that prevailed then compares to 2010:


As noted above, it is a matter of pride that the decisions of Government were implemented with such fairness and transparency, and the migration and other licences were given with such fairness and transparency that not a single objection was raised by any party — and this in a sector in which every step of Government had hitherto been challenged and denounced by one side or the other. When they saw the fairness and openness with which Cabinet decisions were being implemented and licences being granted, the petitioners who had filed a petition in the Supreme Court to stay the implementation of the UASL licensing regime withdrew the petition.

There are several other fabrications that the spokesmen of this Government have put out to deflect people from the issues at hand: who got the money? What were the seniors doing when this loot was going on? But they are at par with the fabrications that I have listed above.

In addition to attending to the routine tasks that had to be implemented during the interim period, as directed by the Cabinet, we began exchanging views about elements of the Unified Licensing regime. Should the bids be single-shot bids — as was the case in disinvestment? Or should the bidding be multi-stage — as had been the case, for instance, in selecting the Fourth Cellular Operator? Should the bidding process be conducted by the DoT — a Department that had itself been dragged into much litigation, and was the object of strident allegations — or should they be conducted by an independent agency? How should incentives be built into the bidding process to induce optimal use of the spectrum, and penalties for hoarding or inefficient use? What should be the stance of Government if, once again, the competitors overbid and then cannot sustain their operations at the high prices they have paid? Should they be rescued as had to be done when the sector was first opened up? Or had the sector become mature enough by now so that firms that overbid should be allowed to go under?

These were the sorts of questions on which we had begun work in the wake of the six-month framework suggested by TRAI.

The Government changed.

No one could have imagined that the advance towards the Unified Licensing regime would be halted. And that what had been the procedures to be followed for the interim period of six months would be made permanent. And that without any authorization from the Cabinet.

That is one reason on account of which the current problems have arisen. Another one is that in UPA-I lines were slipped into the Guidelines without recommendations of the Regulator, without any reference to Cabinet. In UPA-II, the terms of reference of the Group of Ministers were altered without reason or authority. On matters on which the Government is bound by law to seek TRAI’s recommendations, TRAI was specifically told that it had no business to seek to advise Government . . . But the main reason, as stated above, is that in Raja’s case, he followed no procedure, he followed no policy, he adhered to no norm at all. And, even though his misdeeds were known publicly, he was allowed to continue to make a business of his office. In what way does this represent a continuation of anything done during the Government led by Mr. Vajpayee?

Arun Shourie: Mediocrity has become the norm


Source: Rediff
Journalist, author, columnist, editor, politician and administrator, Arun Shourie wears multiple hats with equal ease. Revered and reviled in equal measure for his politics, even detractors admit his intellectual prowess and tenacity.
A veteran of many battles against the authority, Shourie, discusses philosophy, politics and policies in a freewheeling conversation with Mahesh Sarma, editor, Careers360. Excerpts:
You studied at Modern school. Then St Stephen's College. So it wasn't a struggle, right?I have been very fortunate, meaning I have not had to struggle with poverty so to say. I am the son of a very honest civil servant, a very creative one. But I struggled against authority, which would mean governments, dominant intellectual fashions etc. For instance, when everybody was a socialist, I felt that those controls, and the License Quota Raj is going to cost us a generation and everybody condemned what I wrote at that time.

To ascribe a certain elitism just because someone is educated in good institutions -- is it right?Of course not, in fact much of the change is brought about by very small elites. The great masses of India [ Images ] can't produce metal alloys that are needed for rocketry, for missiles, for the Arjun tank. So, we must respect elitism when it is based on merit and competence. Now, mediocrity has become the norm. Intimidation has become argument, and assault has become proof. Because I can assault you therefore I am right.
So, I am much for elitism, which is based on opportunity or everybody, positive help for everybody. And, based entirely on performance and merit. The current, reducing elitism to be a prerogative word has come entirely from this Leftist discourse. Which is, under the guise of equality, you pull down the standards. And anyone who has achieved something, you say, damn fool, elitist.
Somewhere you said that your career has had various happy accidents. What were these accidents?Being born to my parents, complete accident. Meeting my wife (our aunts knew each other), complete accident. I was called for a tea party at my wife's aunt's place and she was such a dazzlingly beautiful girl that I couldn't take my eyes off her. Similarly meeting Mr Ramnath Goenka, who had been putting up a great fight during the emergency was also a complete accident.
How did you get the Express editor's job?Emergency passed, I got to know Ramnath Goenka through many episodes. And the Janta Party had come to power and we were staying in Mr Goenka's house in Bangalore. He asked what I was doing and I said, "What do you mean what am I doing? I can't find a job, I am writing a book. He said, 'Stupid, who is going to read your book? No one is going to read it. You are not finding a job, I can't find any young man, you come. I'll tell the editor to give you some big title.' That is my letter of appointment.
So all goods things that happened, happened by accident?
No, being dismissed is also an accident. By 1982, Mrs Gandhi put so much pressure on him to dismiss me. My good friend, Tavleen came one day and asked what I am planning to do now. And I said, 'I don't know'. She said, 'I'll speak to that person, who runs a syndication service so you start writing and he will syndicate it.' There's a very good friend called Lokesh Sharma who was then running that syndication service. So, that led to columns, led to books.
After reading your book I think you wouldn't mind private entrepreneurs coming into education.Firstly, they will come only if there is profit involved. But, they will not be able to build an institute, an institution of excellence, if they keep interfering and running it as a business. A good model is American institutions; they are all set up by millionaires. Somebody gives a million dollars, someone donates acres of land. But, after that he doesn't interfere, he has that self-restraint to leave it to professionals, each of whom has been selected on the only criteria of their extreme dedication to education.
Exceptions like IISc, TISS, TIFR do exisit but they were all pre-independence institutions.That is a good point, they have been sustained in that spirit. My regret is that a larger number of Indian industrialists who have done well and set up institutes of excellence in their own industries have not done the same thing in education. I am quite hopeful that the new breed of entrepreneurs are self-made men, who did not have much money to begin with but are now billionaires.
If they are enabled to come into the field of education, they will bring the same spirit into education; that is my plea. If we don't do that, the field will be open to racketeers, they will definitely come in and fill up the vacuum. That is the scene as of now, which happens in every society.
What according to you would be an appropriate policy framework?
The greater freedom to persons of worth to set up educational institutions, is one. But, at the same time strong rating agencies which are not in the hands of anybody, they are free spirits. True rating agencies, regulations but ratings that will put pressure for excellence. Some of those will be corrupted, no doubt.
Racketeers will suborn those who are doing the rating. But, some will arise among them saying 'No, our future depends, even our business future depends on being a credible rating.' Second thing that will improve standards is surfeit of supply. Today, racketeers are prospering, because there is a shortage. That is how regulaters get corrupt.
If you were part of Ministry of HRD, what would be your first move on the regulatory regime?To clean up the regulators, because that is the most accessible thing that a Minister can first do, UGC, AICTE and all. The main thing would be to encourage a large number of publications and freelancers to monitor their contributions. That would go a long way. Third, to do everything possible to turn our education system to the future. It's not looking far enough, in terms of the syllabi, that's very important.
Probably use technology to get over the shortage of good teachers. That's very possible today and that would be a quick way to multiply quality in India. We can use institutions which are known for excellence to do their corporate social responsibility by becoming places to upgrade teacher quality in their regions.
Is Mr Sibal going in the right direction?I greatly welcome Kapil Sibal's [ Images ] initiatives. For instance, this move that he has made against deemed universities, it is a wonderful move. But probably it should have been accompanied by much more exposure of the intrinsic worth or worthlessness of some of these institutions. Then, the public opinion would have been created much better. But the objective is a very good one.
Photograph: Jitender Gupta/Outlook Group

I am now distant from the BJP: Arun Shourie

Source: ibnlive

Your Call with Arun Shourie NDTV

on Jul 17, 2011
Your Call: An author of 26 books, Arun Shourie's latest describes him as a scholar, author, formal editor and minister. Take a look at the highlights of Mr Shourie's career, as he answers your questions on Your Call.

I am now distant from the BJP: Arun Shourie


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