The Union Telecom Minister A Raja on Friday responded stridently on Communist Party of India-Marxist (CPI-M)’s allegation of adopting wrong policy during the allotment of 2G spectrum to the existing licence holders that resulted a massive loss of Rs 60,000-crore to the Central Exchequer.
Quoting it ‘one of the biggest financial scam’ so far, CPI-M that was earlier a part of the United Progressive Alliance (UPA) has now accused the UPA government for not addressing this scam.
A Raja in this response has defended the ministry and offered his resignation in case of finding any involvement of his ministry for violating the rule.
Advocating the UPA government’s policy of allocating the 2G spectrums that was on a ‘first-come-first-serve’ basis, Raja said that Department of Telecom (DoT) had followed the Telecom Regulator Authority of India (TRAI)’s recommendations in letter and spirit and had not violated any rule of spectrum allocation.
Clarifying his position and specifying DoT’s action, the Telecom Minister has called a quick press conference and elaborated that Swan and Unitech that had got the licence of 2G spectrum had not sold their rights to foreign companies but sold some equities to the foreign buyers, and the transaction of money were held through Foreign Direct investment (FDI).
Swan Telecom and Unitech after getting licence successfully had not only sold their stake and earned hefty profit but also paved the way of foreign firms to enter into Indian market that was not the part of the 2G-spectrum auction, alleged CPI-M in a released statement on Thursday. “The government has actually got only one-sixth of what it would have got, had it gone through a fresh auction route - a loss of Rs 100 billion to the exchequer on account of Swan and Unitech licences alone,” added CPI-M.
Swan Telecom that had obtained a licence for 13 circles along with the necessary spectrum in Rs 15.37 billion (USD340-million) has later sold its 45% stake to United Arab Emirate based firm Etisalat in USD900-million and earned huge profit by taking its book value to USD 2-billion. Similarly, Unitech, another 2G-spectrum licence holder had sold its 60% stake to Norway’s Talenor without spending a single rupee for executing its licence. It sold its stake in Rs 61.20 billion, while paid only Rs 16.51 billion as a licence fee, elaborated statement.
Attacking the government’s decision to turn a blind eye on reselling the shares, CPI-M Polit Bureau asked, “Whether these companies could sell their shares legally?” ‘Government should either invoke fair trade practice/anti-monopoly sections or look at other operative sections of the licence to see how firms could be stopped from reselling scarce natural resources,’ said the Polit Bureau, ‘If no other recourse is available, it must levy a windfall tax on such speculative transactions.’
CPI has also raised fingers against the DoT’s policy of allotting the licence to bidders on the first-come-first-serve basis that have resulted in a loss of Rs 60,000-crore (Rs 600 billion/$13.2 billion) to the exchequer.
In this response, Telecom Minister Raja said that CPI-M has accused the government of granting the licence to bidders in the through away prices while UPA government has followed the New Telecom Policy of 1999 under which bidding prices have been kept lower to keep the cost low for the consumer.
“The matter has been discussed and clarified with the Finance Minister P Chidambaram. In addition, I have also directed the Telecom Commission to deliberate on the issue of prohibiting sale of equity by promoters,” said Raja.
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