Intro: CAG report on Spectrum and Coal Block Allocation that was tabled in the Parliament in the year 2010 and 2012 respectively accused the UPA government of gross violation and favouritism.
The recent Spectrum and Coal Block Allocation has proved that former Comptroller & Auditor General (CAG) Vinod Rai was very conservative while assessing the loss to the exchequer. In the year 2008 A Raja (then telecom minister) distributed new telecom licenses at 2001 prices and these licenses were bundled with 4.4 MHz of startup spectrum. Department of Telecom (DoT) changed the existing norms and advanced the cutoff date suddenly (forwarded from October 1, 2007 to September 25, 2007) & then further incorporated “first-come-first-serve” clause to benefit certain particular enterprises. Large scale corruption can be imagined from the fact that enterprises like Swan Telecom and Unitech Wireless sold part of their licenses and made profit of hundreds of crores even before launching their operations.
Coal blocks were not only allotted for free but they were allotted to those companies which were never engaged in power sector or ran a coal consuming industry. Some private companies got more coal blocks than it was required for their captive consumption. CAG report also pointed out that some private players sold the coal meant for captive consumption in the market and made profit at the cost of government exchequer. The best way to ensure fair price for any natural resource is the competitive auction method and the UPA government deliberately delayed the introduction of auction process which provided a passage for the favouritism and resulted into arbitrary allocation of coal blocks.
Role of former PM Manmohan Singh
It is worthwhile to note that former PM Manmohan Singh was the coal minister during that time and former Coal Secretary PC Parekh has alleged that Singh had neglected his advice of auction of the coal blocks and continued with the arbitrary allocation. Similarly file noting in PMO shows that Prime Minister’s office was fully aware of the facts about the spectrum allocation. There are concrete evidences which shows that Raja’s letters were reviewed and a detailed note was prepared on the directions of Manmohan Singh. Even the final plan for spectrum allocation was signed by Pulok Chatterji (Joint Secretary, PMO) and TKA Nair (Principal Secretary, PMO).
Very recently Central Bureau of Investigation (CBI) has summoned Manmohan Singh in coal allocation case and after P V Narasimha Rao this is the second time in the Indian history when a PM has been summoned for the investigation.
Infamous Zero Loss Theory
When CAG report came out and the Opposition cornered the government demanding a fair probe in the matter then Kapil Sibbal (then telecom minister) came out with a new concept citing that there is no loss to the exchequer in the 2G spectrum and coal block allocation. He argued that the cheap spectrum has kept the call rates low and helped to increase the tele-density. These baseless arguments were even not supported by his own party men but it surely helped to divert the attention from Manmohan Singh and PMO which were kept informed about all the decisions.
Success of recent allocations
The spectrum allocation is still under progress and about 88 per cent of the spectrum has been provisionally allocated to the bidders for which they have committed over Rs 1,05,000 crore. Bidding amount for 32 coal blocks (out of 204 which were cancelled) has also crossed more than Rs 2,00,000 crore. It is expected that bidding amount for total coal blocks can exceed to Rs 15 lakh crore.
Former CAG Vinod Rai can also have a sigh of relief after the huge success of these auctions and those who raised questions on his objectivity and went to the extent of propounding new economic concepts have nothing to explain now.
Now it is very much clear that the UPA government should have acted as custodian of natural resources but they allotted it at throw away prices to benefit particular business groups and took kick-backs at the cost of exchequer. As far as investigation is concerned, Supreme Court has conveyed its displeasure on various occasions and the federal agency should try to come out of its image of a “caged parrot”.
Shshank Saurav (The writer is a chartered accountant)