Sunday, April 28, 2024

Subramanian Swamy Approaches SC on Govt's Petition To Modify 2G Scam Judgement To Avoid Auction of Satellite Spectrum

I am not sure how many people have read the news - Subramanian Swamy Approaches SC on Govt's Petition To Modify 2G Scam Judgement To Avoid Auction of Satellite Spectrum. This is a very important piece of news. Just go back 12 -13 years, the wheel has returned to where it started. The 2G spectrum sale controversy was the rising point of the BJP. So it is very important to look back at what the BJP said then and what the Modi government contemplating to do now. It is possible that the memory lane may have faded for some of us. There is a beautiful word in Hindi/Sanskrit/Assamese/Bengali - अतंद्र प्रहरी Atandra Prahari. There is actually no equivalent word in English that would perfectly mean the same thing. However, a rough translation would be Alert Sleepless Sentinel. Subramanian Swamy is acting as that alert sentinel. His memory lane has not faded

Bharatiya Janata Party (BJP) leader Dr Subramanian Swamy has approached the Supreme Court (SC) opposing the Union government's petition to modify the 2012 judgement on the telecom scam known as the 2G spectrum scam to avoid auction in the satellite spectrum. Nearly 12 years after the judgement, the government filed a plea before the apex court seeking to reverse the spectrum allocation process to allow resources to be allocated by the executive's administrative process instead of the auction as directed by the SC. The SC ruling came in response to a PIL (public interest litigation) filed by Dr Swamy, the then president of Janata Party and senior counsel Prashant Bhushan.

Subramanian Swamy (@Swamy39) on X

In short, the Modi government is seeking to reverse the spectrum allocation process to allow resources to be allocated by the executive's administrative process instead of the auction as directed by the SC. The Modi government is now asking the court to allow it to apply the process followed by the UPA government for the allotment of 2G spectrum in 2008. About which BJP made a massive hue and cry that it was a scam of 176 lakhs crores. If that process of spectrum allotment was a scam, how come the clean Modi government wants to get back to the same process? Let the Modi Government give a declaration in the court as well as to the public that the process followed by the then-UPA government was crystal clear and was better than the Supreme Court-guided process.

Did you know that after doing an auction of so many spectrums 2G, 3G, 4G, and 5G Spectrum together on 1st August 2022 Modi government could manage only Rs 1.5 lakh crores? However, this is the total bid amount for 20 years not the annual earnings of the government. Payments for spectrum can be made in 20 equal annual installments, to be paid in advance at the beginning of each year. The bidders would be given the option to surrender the spectrum after 10 years, with no future liabilities for balance installments. The expected total first annual installment that the government will garner from the bidders has been pegged at Rs 13,365 crore. Whereas the government was expecting Rs 4.3 lakh crore at reserve prices from the auction of 72 GHz of airwaves for 20 years across 10 5G bands.

Actually, I feel that a much bigger scam has happened this time in the spectrum auction. First of all, for this sale, the rate was cut by 40% on the reserved price since all the bands had gone unsold in the last two auctions due to what carriers said was its high price. This could be because of a cartel between the 3–4 players. Ideally, all the bids should be rejected if it is below the reserved price. Who justified this 40% cut? Secondly, the Modi government has changed the payment terms. Earlier the entire bid amount had to be paid in one shot. Why this concession and in whose interest? Thirdly and most importantly why the bid period is for 20 years when the bidders have not made outright payment of the bid amount? This is like a price freeze offer for 20 years without any benefit to the nation. Just think Ambani will get the spectrum at the same price in 2042 that they have bid today. What will be the value of the annual payment of Rs 13,365 crore in 2042? They will practically get the spectrum free of cost.

Former CAG - Vinod Rai, the man in total black. The white shirt doesn’t suit him.

In the alleged 2G Spectrum scam in 2010 CAG Vinod Rai estimated a loss of 1.76 lakh crores. The mobile phone penetration and the population were much-much smaller then. Plus there was no smartphone in 2010. Now you tell me - is it possible by any means to do a scam of 1.76 lakh crore in those days? When the Modi government would be earning only Rs 13,365 crore from the auction of 2G, 3G, 4G, and 5G Spectrum together, what kind of money would you have expected the Manmohan Singh government to earn back in 2010 to do a scam of 1.76 lakh crores by selling only 2G spectrum?

The special court appointed by the SC in its verdict categorically rejected that any scam took place. The court ruled that this case was baseless. As per the judgment, "Some people created a scam by artfully arranging a few selected facts and exaggerating things beyond recognition to astronomical levels."

The above table gives the comparative outcome of the various auctions. The viewers are free to make their own assessment of whether they find any scope of doing a scam of 1.76 lakh crores. The data has been collected from the auction value analysis done by the Department of Telecom. I am amazed where that genius Vinod Rai found the scam. People would have some idea of what kind of mobile penetration India had in 2010. In 2010 the smartphone penetration rate in India was only 2.75% and in 2022 it is 66.21%. Mobile phone internet user penetration in India in 2010 was only 0.05% and in 2022 it is 66.16%. See the huge jump in mobile phone penetration, have you seen a compatible increase in revenue in the Modi government tenure commensurate with the growth of smartphone penetration?

Image source - Staatista 2022

  • I would like to point out that in two rounds of action in 2010, the total bid amount was around 76 K Crores with about one twenty-fifth of the subscriber base in comparison to that of 2022. And this is without considering the revenue from BSNL & MTNL. So I think we can safely say the revenue collection was not at all low if we consider the subsequent years’ auction amount.
  • Secondly, somebody pointed out that even though the subscriber base was small, the mobile bill amount was higher to the tune of Rs.1200–1800 per month. Let’s say that the mobile bill amount is 8-10 times higher than today. But we have a 25 times higher subscriber base today. Let me give you the mathematics. Say in 2010, 100 subscribers paid a total bill; in the amount of Rs.180000/-.( Rs.1800 X 100) Now in 2022 with a 25 times higher subscriber base 100 X 25 =2500 X Rs.200/- =Rs.500000/-. That means that even though the bill amount has gone down drastically, the revenue collection is more than double, almost two and a half times. And this is considering the average mobile bill value at Rs.1800. However I am sure in 2010 the average bill value wouldn’t be more than Rs.1000/- Considering that the auction value should be five times higher in 2022, which is not the case.
  • Somebody pointed out that the entire 5G spectrum for all the cities was not sold in the current auction. Possible. But then the total bid amount has to be five times of 2010 auction amount considering the above calculation. Secondly this year so many spectrums 2G, 3G, 4G, and 5G were put up for sale, not 5G alone.
  • Also, I would like to point out that in 2010, the major part earnings of the telecom operators were consumed by infrastructure and network expansion costs. With a small subscriber base, the per-customer infrastructure cost was much higher. With the increase in subscriber base, the infrastructure & network expansion cost doesn’t go up proportionately. For example, in a city, you have a 1 lakh subscriber base, if tomorrow it increases to 5 lakh subscribers. the infrastructure cost remains almost the same because the infrastructure is created in one go considering the future scale-up provision.

BJP then complained that the bidding process was not correct or transparent. (But Now the Modi Government finds it transparent and wants to go back to the same process.) Over the last twenty years, government procedures and processes have gone through massive changes. Even today most government work happens through physical file movement. In 2010 the entire process inclusive of tendering was through a manual route on paper. Today you can say it was wrong, but then it was the correct process. You can say that the spectrum auction process followed in 2010 was wrong or was with malafide intention only if the revenue generation has increased substantially after changing the process. But that is not the case. The new auction mechanism has been followed since 2012 as per the Supreme Court-provided guidelines. As regards corruption it was possible in 2010 and it is possible even today. Rather I would say the scope of corruption is much higher today. With a lesser number of players, the scope and chances of a cartel are much higher.

One thing is getting increasingly clear, the then UPA government led by Dr. Manmohan Singh had a robust process which now the Modi Government wants to follow though possibly for the wrong reason. The Modi government had to adopt most of the Congress/UPA government policies - be it Aadhar, MNREGA, MSP, GST, PDS, NAM, Niti Aayog ( Planning Commission name changed), fall back on Russian support, fall back to the two-state policy on Israel, acknowledging Palestines right, friendship with Afghanistan, Rupee trade initiated by Nehru in 1953. I can give a hundred other examples where the Modi government had to fall back or take a U-turn to follow Congress/UPA government policies. The days are not far that people will accept Nehru and Indira was right on most occasions contrary to what Modi wanted to prove.

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