BJP accuses Mr. A. Raja for Biggest (Telecom) Scam in Independent India

a-raja  The Central Bureau of Investigation has registered a regular case with regard to the allotment of spectrum for the 2-G license issued by the Department of Telecommunications in 2007.  Offices of the Department of Telecommunications have been searched and various documents have been seized.  In 2007 an open license regime was recommended.  Applications for telecom licenses were invited setting 1st October, 2007 as the deadline.

The Bharatiya Janta Party (BJP) has alledged that even when applications were invited till 1.10.2007, an artificial cut-off date i.e. 25.9.2007 was created and applictions received between 25.9.2007 and 1.10.2007 were summarily rejected and not considered. Rules of the game were changed after the game had begun.  All friendly applicants, mostly real estate companies had been advised to put in their applications on or before 25.9.2007.  This is not the Opposition’s charge as the Prime Minister has commented. 
It is now a judgment of the Delhi High Court, which has quashed the fixation of these cut-off date wherein many experienced players were left out and 9 licenses were issued to relatively inexperienced parties.  

BJP also alledged that the amount to be charged for the licenses and the spectrum allocation from these 9 operators. The license is merely an entitlement to operate the service.  The physical operation can commence only after the allotment of spectrum.  Together, the two were allotted at a price of Rs. 1650 crores per operator.  This price was taken not on the basis of the 2007 market value of the license but on the basis of an auction held in 2001which determined the 2001 price.  Thus, a valuable public asset was being allotted in 2007 at a 2001 price.  The Minister’s contention that the TRAI had recommended this is wholly erroneous because the TRAI had recommended that “the entry fee determined in 2001 is not the realistic price for obtaining the license. Perhaps it needs to be re-assessed through a market mechanism.”  In any case a Government asset should ordinarily be sold through an auction.  The value of the license and spectrum in 2007 could not be the same as in 2001.  The telecom market has grown phenomenally during this period.  Obviously, the government and the Public Exchequer suffered a loss.  The quantum of loss suffered in this case is easily determinable.  The allotees post allotment did not operate the service. All that they owned was a shell company and a guaranteed spectrum.  They availed the 74% FDI policy of the Government and found buyers/ joint venture partners from the international market.  The companies were overnight valued at over 200 billion dollars (over Rs.9000 crores) and a large chunk of the equity was sold by at least 3 licensees to overseas partners at a price of Rs.6000 – 7000 crores.  If the value of spectrum in each case was over Rs.9000 crores, obviously the Government lost over Rs. 7000 crores per each license.  For the 9 licenses collectively along with the spectrum, the net evaluation exceeds Rs. 60,000 crores.  

BJP is of the views that this loss would be further compounded because the additional spectrum being made available in the market at a throw away price would suppress the value of the 3-G spectrum for which the Government now plans an auction.  If auction can be held for the 3-G spectrum in accordance with the decision of the EOGM why was the same principle was not followed while allotting the 2-G spectrum.

Do you agree with BJP? or you think Telecom Minister A. Raja is not involved in this? Do post your comments about what you think about this.