COLUMN: JPC’s missive to DoT an attempt to obfuscate 2G scam?

The decision by the Joint Parliamentary Committee to ascertain the ‘loss of revenue’ due to a shift in telecom policy 12 years ago is likely to open another can of statistical worms. The move is also likely to be aimed at obfuscating the core issue of a minister manipulating existing policy for favoring a handful of companies.

The JPC has asked the Department of Telecom asking it to ‘quantify the losses’ caused by the changes in policy during the NDA regime of 1999-2004.

The NDA had, after repeated petitions by a cash-starved telecom industry, moved from a ‘fixed payment’ model to a ‘percentage of revenue’ model for telecom operators in 1999. By tying their payments to their actual revenue, it had reduced the payments that mobile operators — still in their infancy — had to make at that time.

The move is widely credited with bringing down mobile call rates from Rs 12-16 per minute in the late 90s to Rs 0.50 per minute in a few years.

The Congress and DMK have repeatedly tried to link the change in policy with Raja’s alleged crime of rigging the license allocation process to support “his friends.”

BJP have, on their party, repeatedly tried to separate the two — pointing out that one was done in a transparent and illegal manner to save an almost dying industry while Raja’s act was done clandestinely and in breach of the law and policy to favor a handful of pre-determined bidders.

Raja is accused to arbitrarily changing the criteria for deciding the ‘seniority’ of mobile license applications from the date of application to the date of submission of bank guarantees etc.. The Comptroller and Auditor General of India had pointed out that some of the applicants, who are alleged to be in cahoots with Raja, had readied all the bank guarantees and documents in advance of the policy change and submitted it immediately after Raja made the change at around 4 pm on the day of receipt of bank guarantees.

It pointed out that if the companies did not have early information about the planned change of seniority criteria, they could not have produced all those documents by 6 or 6:30 pm on the same day.

The value of the licenses is now estimated at around $10 billion, but was given away to these companies for around $1.5 billion. The companies later sold huge chunks of these companies for big bonuses to international players.

The Joint Parliamentary Committee, headed by the Congress MP, is now trying to tie the above act with the move by the then BJP-led government of 1999 towards a revenue-share model. The Comptroller and Auditor General too had noted that when the government moved away from the fixed fee model to the percentage model, the payments that it received shrunk.

However, most telecom experts point out that there might actually have been no loss in the long term as the move — mirrored in many countries — also helped save the industry from bankruptcy and increase their total revenues. Thanks to the higher revenues, the government was able to reduce the share of revenue from 15% to around 6% over the coming years, even as the total money that it got kept on increasing due to the growth in subscribers.

“For example, an argument can be made that if the policy was not made and the call rates remained at Rs 16 per minute, the total number of subscribers would still be in lakhs, rather than 70-80 crore.. Besides this, government policy is not solely directed at increasing its own revenues, but also at improving the services available for the common man,” points out a BJP leader.

On the other hand, Raja’s change of seniority condition from date of application to the date of completed bank formalities, has been seen clearly as intended to benefit a few of the pre-informed applicants.

Given the situation, any attempt to find out whether there was actually a loss or a gain from the policy, called National Telecom Policy of 1999, is likely to be fraught with controversies.