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 Rule of Law
Tata to Raja’s scam
The Financial Express, India Wednesday, December 1, 2010

Sunil Jain
Ratan Tata has rightly argued that the Niira Radia tapes violate the right to privacy and the Government has to answer this issue. He claims not to know what the scam is all about, but that is ironic as he was the only Indian industrialist in the field to say that spectrum should be auctioned at a time when Sunil Mittal asked him to send his extra money to Prime Minister's relief fund. The Tata group has benefitted immensely from Raja's policy of dual technology licenses, writes Sunil Jain in The Financial Express.

Ratan Tata has struck all the right notes when he said that the Niira Radia tapes violate the right to privacy and the government has a lot to answer for. While no one questions the government’s rights to tap a citizen’s phones, for an income tax investigation say, the government is honour-bound to protect the data—so, at some point, the I-T department and/or the CBI to whom it gave the tapes to help along with its investigation, has to explain how the information leaked.


Tata has gone on to say the calculation of the loss to the exchequer on the basis of the 3G auction ‘looks somewhat like a hindsight issue’ and concludes by saying ‘what is unclear to me is what really is the scam?’ This is especially ironic since, in 2005, it was Tata who was the only Indian industrialist in the field to say that spectrum should be auctioned—at that time, Sunil Mittal had said that if Tata had so much extra money, he would do well to send it to the Prime Minister’s Relief Fund.

First, it has to be pointed out, the CAG report has not calculated the loss only on the basis of the bids received in the 3G auction—this, by the way is not incorrect, since Tata’s own company has just come out with tariff plans for its 3G offerings that are comparable to the current 2G tariff offers of most companies.


More important, the Tata group is a big beneficiary of Raja’s policy—of the Rs 1,76,000 crore loss the CAG talks of, Rs 37,154 crore is due to what’s called ‘dual technology’ licences. These are the licences given to firms like the Anil Ambani group and the Tatas, firms that already had CDMA-based mobile phone licences but were now also given GSM-based mobile licences. So, if Unitech and Swan got licences at a sixth or less of their actual value, so did the Anil Ambani group and so did the Tatas.


There is little doubt, as the CAG says, that firms like Bharti and Vodafone that have got spectrum beyond 6.2MHz should pay the market price for it, since there is nothing in their licence conditions that says they should get spectrum without paying for it. There are various figures for losses, ranging from Rs 13,000 crore to Rs 36,993 crore for this, depending on whether you use the Swan figure or the 3G one. But let’s get some perspective on this. Firms like Bharti and Vodafone have paid an extra spectrum charge for this every single year, at a rate that’s roughly 25% more than that paid by other firms who don’t have this ‘extra’ spectrum—the spectrum charge is an annual levy based on the revenue a firms earns from the spectrum it holds. This, in the case of Bharti, works out to around Rs 75 crore in the latest quarter, or around Rs 200 crore a year.


The same probably applies to the issue of ‘hoarding’ spectrum where firms like Bharti are servicing 8.7 lakh subscribers per MHz of spectrum per circle (on an all-India basis, Bharti is servicing 1.9 crore subscribers per MHz of spectrum), 8.2 lakh for Vodafone, 5.8 lakh for Reliance and 5.2 lakh for Tata and next-to-nothing for the new players.

As for Tata’s complaint of the lack of a level playing field, which is one of the issues Niira Radia was supposed to help address, Tata is right in saying that others like RComm have got spectrum in all service areas while the Tatas haven’t. Indeed, this comes from the fact that RComm paid its licence fee even before the policy was announced. But this doesn’t detract from the fact that, in the circles he got dual-technology spectrum, Tata has benefited.


So let’s listen to Ratan Tata when he raises the issue of the government’s job to protect the privacy of its citizens. But let’s keep the issue of favouritism in issuing telecom licences separate from this debate.

This article was published in the The Financial Express on Wednesday, December 1, 2010. Please read the original article here.
Author : Mr Jain is with The Financial Express.
Tags- Find more articles on - CAG | ratan tata | Tata group

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