The special court examining the criminal conspiracy around the 2G spectrum allocation gave a clean chit to P Chidambaram saying he had absolutely no role to play in the manner in which A Raja subverted the telecom licensing process. This followed the Supreme Court order by Justice Ganguly clearly stating that telecom minister Raja had repeatedly disregarded the advise offered by the then finance minister Chidambaram.
Both the Supreme Court and trial court order, if read together, clearly separate the telecom policy flaws, for which the UPA government has been asked to take correctives by cancelling 122 licences, from the alleged criminality involved in the procedures adopted by Raja in giving out licences.
The clear distinction, drawn by the two court orders, between a suboptimal policy of the government and the alleged criminality of Raja?s actions would give the UPA alliance some time to recover from the battering it has got on account of the 2G scam. Politically, the BJP committed a mistake by overtly and covertly endorsing the strategy adopted by maverick politician Subramanian Swamy who had chosen to single out home minister Chidambaram as a special target of attack by asking him to be made co-accused with Raja in the criminal conspiracy case.
The two court orders have, in a sense, put paid to this narrow approach followed by the opposition of targeting just Chidambaram. A top BJP leader admitted to this writer that battles which are essentially political in nature should not be fought in a court of law on narrow legal points. There is a big risk in doing that.
That seemed to be the basic flaw in the BJP-Subramanian duo going after home minister Chidambaram. Also, the idea of going after Chidambaram was partly triggered by a political perception that the home minister was not very strong within the Congress power matrix. The inter-ministerial background paper initiated by the PMO early last year suggesting that Chidambaram as finance minister could have prevented Raja from subverting the licensing process had somewhat reinforced the belief that the home minister was getting isolated within the Congress. There is no convincing explanation till today as to why the PMO had initiated that exercise and later allowed the details of a purely background note to be released in response to an RTI application. This was akin to a massive self-goal.
So, all these developments seemed to have made Chidambaram an easy target for the opposition. Politically, however, this may have boomeranged on both the BJP and some of Chidambaram?s detractors within the Congress. Priyanka Gandhi publicly coming out in support of Chidambaram is something that must get many Congressmen worried now.
On a larger plane, the two court orders last week have given the government a golden opportunity to retrieve the situation. The Supreme Court order, in a sense, gives the government a chance to reverse the wrong by reissuing 122 licences via the auction route. That will help the government correct the mistakes committed on the policy front. As for the criminal conspiracy and bribery charges, the special trial court is in the process of examining various witnesses.
The Supreme Court order has also set an important precedent for all future governments to follow. In a situation where the demand for scarce natural resources exceeds supply, the policy of first-come first-served does not work. So, governments will have to be careful in the future when they allocate scarce resources such as spectrum, coal, land and minerals. Some form of real market price discovery process will become de rigueur now.
In the current instance, the cancellation of the 122 licences will present some very tricky legal problems. The Supreme Court has said the entire process must be concluded within four months. Four months will not be adequate to deal with all the issues. The government will have to go back to the Supreme Court and seek more time.
The majority of the telecom licence holders have not rolled out their services. It will be easier to cancel their licences and auction them. The telecom services business has become very tough and margins have been shrinking over the past few years. So many who had acquired these licences in early 2008 when the telecom sector was booming with high stock market valuations may even be happy to surrender the spectrum allocated to them. This will create another kind of consolidation in the industry.
However, the real problem will occur in dealing with licence holders like Uninor, a subsidiary of the Norwegian company Telenor, which has already invested R14,000 crore an built a subscriber base of over 36 million. It will be difficult to cancel the licence of such a company. In such cases, what the government could do is ask the management to pay the difference between the new auction price and the fixed fee paid earlier.
In some ways, the auction process this time around will be informed by some degree of sobriety as the sheer euphoria of bumper profits from telecom services does not exist any more. Valuations of most telecom services companies have taken a severe beating since the boom times of 2007-08.
The best case scenario for the UPA government now is to treat the Supreme Court order as an opportunity to strengthen the institutional mechanisms to allocate not only spectrum but also other natural resources in a transparent manner. The UPA has about two and a half years more to go and it must heed the spirit of some of the judicial interventions which are calling for institutional
reforms. This will also yield political dividends eventually.
mk.venu@expressindia.com
