1. Taj Man Singh auction: How can land be given to Tata Group in perpetuity?

Taj Man Singh auction: How can land be given to Tata Group in perpetuity?

Perhaps the best policy response to the CAG report on the 2G scam or the one on Coalgate was the government decision to, in future, auction all licenses—once there was an open auction, with no possibility of the government favouring anyone, there was no question of anyone pointing fingers.

By: | Published: November 23, 2016 6:15 AM
taj hotels delhi, taj mansingh, Taj Mansingh hotel, taj mansingh delhi, taj mansingh auction, NDMC, Tata, Indian Hotels Company Ltd If the Taj’s argument is that it should have the right of first refusal—that is, allow it to match the highest bid—it implicitly has this right anyway since it can outbid anyone in the auction.

Perhaps the best policy response to the CAG report on the 2G scam or the one on Coalgate was the government decision to, in future, auction all licenses—once there was an open auction, with no possibility of the government favouring anyone, there was no question of anyone pointing fingers.

That is why, when telecom licenses were given out on various occasions after 2008, there was no suggestion of any irregularity—ditto for the coal auctions after that.

So, while incumbent telcos believed their telecom spectrum would be renewed after the initial 20-year period ended in 2014/15, this was not done and, in order to protect their existing businesses—their customers would all disappear if their access to spectrum disappeared—they had to pay through the nose at the time of renewal in the auctions.

Given this healthy precedent, it is not just odd that the Taj group of hotels should be protesting against the NDMC wanting to auction the Mansingh Road property in south Delhi, but that the Supreme Court should be willing to put a stay on the auction process till it hears out the Taj group’s arguments.

If the need for continuity of business is the Taj’s argument—if the lease is auctioned and some other group wins it, the Taj’s business at that property is over—surely the same argument would have held for the telcos as well? If the Taj’s argument is that it is paying a revenue share to the NDMC anyway, the telcos were giving the government 13% of their top-line even prior to the auctions and so should not have been asked to buy back their spectrum in 2014 and 2015.

If the Taj’s argument is that it should have the right of first refusal—that is, allow it to match the highest bid—it implicitly has this right anyway since it can outbid anyone in the auction.

The reason why the government did not agree to extend the validity of the telco spectrum—and it was right in doing so—was that, had it done so, the spectrum would have remained with the telcos in perpetuity, there would never be a new player that could have come into the market, and the government would never have got the kind of money it did from the auctions. Apart from the fact that the same applies to the Taj property on Mansingh Road, there can be no exception to the government policy of auctioning licenses/leases.

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