Thursday, April 18, 2013

JPC report on 2G – some right conclusions, some wrong….

The JPC set up on the BJP’s demands – for which it blocked a full Parliamentary session – to investigate the CAG’s assessment of a Rs 1.76 lac crores “notional” loss to the exchequer is ready with its decisions. The report looks like being a mixed bag. It has come to some conclusions correctly. It’s cleared a few people rightly. But it has also blamed a few people wrongly. As a result, it’s bound to lead to more questions being asked; rather than more of them being answered.

The first thing it did right was to reject the CAG’s sub-moronic thinking on the subject. The JPC rightly (finally) argues that the policy of cheap spectrums caused enormous benefits to the people of the country. The “loss to the exchequer” did not go on to line the pockets of politicians (there was no “mota maal” as Sushma Swaraj had colorfully described it), but went on to start the telecom revolution that we saw. It led to empowerment of the lowest sections of the society, which brought them at least partly into the mainstream (“inclusive growth”). Suddenly, this section of the underprivileged became identified by a “secular number” and not by his “caste, creed, religion, sex or language” (Ramachandra Guha’s analysis of the 5 ills of India in his book India after Gandhi). Suddenly, this person, ostracized by society for centuries, became a small entrepreneur, repairing phones, delivering newspapers, making duplicate keys…..all because he was just a phone call away. The CAG couldn’t care about all this, but the political executive has to. It is the government’s job to elevate people out of poverty, not the CAG’s. The JPC has finally given a green signal to the cheap spectrum policy.

The second thing it set right was that the corruption (if any) was limited to the last mile – in this case to Raja’s office. It has now been proved that it was Raja who altered the press release which went about starting the process of favoritism.

Thirdly, it has also cleared the PM and Chidambaram of all charges. This finally shows (correctly) that the two were involved in the approval of the cheap spectrum policy, and they had pushed it keeping the end consumer benefits in mind. They had rightly identified that “revenue maximization” wasn’t the only goal of the government. That the policy had been started in the past, and they preferred to continue it rather than go for auctions. That TRAI also had not suggested auctions. One thing the report appears not to have brought out directly, but which is equally relevant to the discussion here, is that it was the same PM and the same UPA government who had approved auctions for 3G. That was alright considering that 3G was a totally different ball game targeting largely the “haves” of the society. Had 3G airwaves not been auctioned, the 2G “scam” would not even have been born. Everything would have continued in a “business as usual” fashion. How can a policy decision taken in the future, and for a different subject, become the reason to call something in the past a scam? If for instance, a better formula is found for future telecom technologies, will that make 3G a scam as well?

But the JPC report also makes some blunders. It’s political bias simply cannot be missed. By blaming the Vajpayee government for causing a loss of Rs 40,000 crores, it risks the report being discarded as piece of political crap. In my mind, the NDA government did the right thing by changing the previous policy and making “revenue sharing” the formula for pricing spectrum. It was this change which made telecom a viable business, and which led to billions of dollars of investments, and a rapid increase in tele-density.

There seems to be a mistaken notion (and the BJP is as guilty of this as the Congress) that a government cannot or should not change a policy once its made. This is nonsensical. The job of the government is not to stick to anything, but to be so flexible as to achieve the set goals in the best possible way. Vajpayee was right when he tweaked the previous policy, because the goal of the government even then wasn’t maximizing revenues, but growing tele-density. And Manmohan Singh was right in continuing Vajpayee’s policy, because tele-density had increased to only 250 million in 2004 (now its crossed 900 million) and the job was only half done. There was no scam back then in NDA days; there was no scam during UPA-1 and 2 either. The real scam in the sector is taking place at present, with the government following a destructive policy of setting high spectrum prices and letting the tax hounds loose after the telecom revolutionaries. Instead of saluting their good work of the last two decades, the government is hunting them down as if they were thieves and criminals. This is the scam.

But why blame the Congress alone for this mess? It was the BJP that jumped onto the flawed CAG report and made political hay. Now the shoe is on the other foot. If tweaking is wrong in principle, then Vajpayee was indeed responsible for the loss of Rs 40000 crores. But if tweaking is necessary with changing times, then the 3G auctions are not indicative of a scam in 2G. Equally, if we now go in for coal auctions (if we do), then the previous policy of “beauty parade” wasn’t a scam either. Countries learn with experience and keep improving. Commenting on the past is the job of a fraud opposition. And of course this particular fraud CAG.

The BJP also cannot rubbish the JPC report. It was after all, the party that demanded that it be set up. The JPC is always headed by a ruling party member; the PAC by the opposition leader (in this case, Murli Manohar Joshi). Had the BJP not foolishly insisted on a JPC, it would have had more control on the matter. It could have used the PAC (as it has done) to attack the government. But because of its blinkered, near-term thinking (blocking Parliament made sense then), it is now suffering.

The government should now acknowledge that earlier 2G policies were right in the most; and should be continued. The auctions methodology is flawed as far as 2G is concerned. But if it feels bound by the SC ruling on this, then it can still adopt better auctions methods. Methods that do not burden this empowering industry, but which still bring more transparency in. A recent ET story suggests that the government (DOT) is considering reverting back to “administered allotment” (allotments sans auctions) as one of the way to revive the sector. This is a good move.

The real truth is that the 2G “scam” should now be buried. The truth is out in the clear. Cheap spectrum was a government preferred policy; not a scam. The NDA was right in improving a previous flawed policy. There was no scam there either. The UPA was right in continuing with the policy. 3G auctions were right in their own way; and 2G “administered allotments” were right in theirs. The butcher who started it all off – the CAG – is the only who should answer. But will he? Or is he awaiting his retirement, and a possible gubernatorial posting once (and if) the BJP comes to power in 2014????

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