Finance ministry had pushed for auction, but Raja said no | delhi | Hindustan Times
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Finance ministry had pushed for auction, but Raja said no

Although law minister Salman Khurshid on Monday downplayed the controversial finance ministry note on the 2G allocation, available documentation reveals that the finance ministry at the time had taken steps in support of auction of the 2G licences both before and after the telecom ministry under A Raja unilaterally issued 121 licences at the old entry fee of R1650 crore on first-come first-served (FCFS) basis. HT reports.

delhi Updated: Sep 26, 2011 23:15 IST
HT Correspondent

Although law minister Salman Khurshid on Monday downplayed the controversial finance ministry note on the 2G allocation, available documentation reveals that the finance ministry at the time had taken steps in support of auction of the 2G licences both before and after the telecom ministry under A Raja unilaterally issued 121 licences at the old entry fee of R1650 crore on first-come first-served (FCFS) basis.

The March 25, 2011 note prepared by deputy director PGS Rao had suggested that Chidambaram, when he was the finance minister, could have insisted on the auction route for 2G licences instead of the first-come first-served basis followed by A Raja.

Top government sources said that between May 13, 2005 to November 11, 2008, the finance ministry under Chidambaram had been in favour of the auction route for 2G spectrum licences but the telecom ministry refused to heed to written advice and insisted on FCFS route.

Sources said not only did the finance ministry recommend that terms of reference of the group of ministers (GoM) under Pranab Mukherjee, then external affairs minister, should include spectrum pricing, it also protested against issuance of three licences at the old entry fee on November 22, 2007.

Documents show that the finance ministry took the following steps:

November 29, 2007: Telecom supported the old entry fee on ground that TRAI on August 28, 2007 had recommended no change in policy and maintained that calculation of the entry fee was right of the DoT as approved by NDA Cabinet (paragraph number 2.4.6) on October 31, 2006. The finance ministry then immediately initiated a note to revise the entry fee.

January 3, 2008: Finance ministry prepared a comprehensive paper recommending both revision of entry fee and auction route. This was to be discussed on January 9, 2008 but was postponed to January 15. On January 10, telecom ministry issued 121 letters of intent at old entry fee.

On January 30, 2008, the first meeting between Chidambaram and Raja along with senior officials took place. This was followed up by a finance ministry approach paper (dated Feb 8, 2008) that said auctioning was legally possible but was contested by telecom.

Three days later the finance ministry again differed with telecom and observed in writing that “entire range of spectrum allotted should be priced”. Persistent efforts paid off and telecom assured finance in April 2008 that it would bring a note before full telecom commission on various aspects of spectrum pricing.

Government sources said that finance ministry finalised a paper on all outstanding issues including spectrum pricing end April and on June 27, 2008, the conclusions of discussions between finance secretary and telecom secretary were recorded on the paper with any over-ruling.

The following two important steps were taken:

July 4, 2008: Final paper placed before Prime Minister and it was decided that entry fee would be updated, over and above the entry fee of R1,650 crore, adopting one of the two methods that would yield either R3,028 crore or R3,400 crore for additional spectrum beyond the start-up of 4.4 MHz and would apply to all 121 licences

November 10-11, 2008: For November 11, 2008 meeting, the finance ministry recommended that telecom commission may suggest “suitable mechanisms for updating the entry fee of R1,650 crore fixed in 2003. After the 26/11 attacks, Chidambaram was shifted to home ministry on December 1, 2008 and Pranab was shifted to finance on January 24, 2009 as PM underwent heart surgery the next day.