Raja misled finance dept

CAG pulls up DoT for ignoring ministries advice

The finance ministry has at various points of time been advocating for a more rational mechanism for allocation and pricing of 2G spectrum, but its views and concerns were overlooked by the DoT, the CAG said in its report.

“The Finance Ministry had, right from the year 2003 quoting international practices and scarcity factor, maintained that auction of spectrum and its trading under a regulatory frame-work could induce competition and transparency in the system and would result in the most efficient utilisation of spectrum,” the CAG noted.

Giving graphic details how the department overlooked suggestions of the Finance Ministry with regard to spectrum allocation and pricing from time to time, the CAG asserted that the pricing issue should have been decided in consultation with the Finance Ministry.

What irked the CAG was that when a high-powered Group of Minister (GOM) was constituted in February 2006, its Terms of Reference (TOR) were modified at the instance of the DoT to keep the issue of spectrum pricing outside its purview.

Though the Finance Ministry insisted on its inclusion in the TOR for the GOM, the department maintained that “spectrum pricing was within the normal work carried out by them”. The Finance Ministry had opined that spectrum pricing was an issue which had far reaching consequences for the economy and needed to be debated, but this was not considered at the highest level and the views of the DoT prevailed in the finalisation of TOR. In 2007, the Finance Ministry had questioned the sanctity of continuing with a price determined way back in 2001 without any indexation of current valuation and sought review of the matter.

But the telecom ministry “conveniently” quoting the Cabinet decision of October 2003 justified to the Finance Ministry that it was authorised to calculate the entry fee for licenses depending on the date of payment. Agreeing with the views of the Finance Ministry, Member (Finance) of the department had also sought an in-depth analysis of the issue prior to taking any further action to which the DoT secretary had concurred. But the then Telecommunication Minister (A Raja) overlooked these observations.

“The action suggested that the Minister was not open to the idea of discussing and deliberating the issues involved at appropriate levels when there was a high risk of huge revenue loss to the government exchequer,” the CAG pointed out.

AG’s opinion option

The CAG also documented how the ministry ignored the advice of Law Ministry on handling the applications from various telecom companies for allocation of licences under the 2G Spectrum.

In October 2007 the DoT itself requested the Law Ministry to obtain and communicate the opinion of the Attorney General (AG) and Solicitor General to enable it to handle “an unprecedented rush of applications in a fair and equitable manner, which would be tenable”.

The Law Ministry suggested that the whole issue be first considered by an Empowered GoM (EGoM) and in that process, the legal opinion of the AG could be obtained.

“Surprisingly, this opinion was felt to be out of context at the level of Minister and hence the benefit of a discussion in the EGOM was also forgone,” the CAG noted.