Rs.1,76,000,00,00,000 Amount is more or the Zeros?

Every year India has been hit by some or the other trouble, may it be terrorists attack, may it be a tsunami or an earthquake, and may it be some epidemic. Year 2010 has been hit by a tsunami of the scams. While mid year marked the shameless abuse of public money in the commonwealth games scam, the sheer size and scale of scam in 2G spectrum allocation has left the country dumb struck. The audacity of the former Telecom Minister in brazenly throwing all rules to winds, presiding over the allocation to spectrum – country‘s precious resources – to dubious companies – who then went on to make crores of profits by simply reselling these licenses to their foreign companies allies.

The telecom sector has always been notorious for its scams — with ministers like Sukhram, Pramod Mahajan and now A Raja. It’s been a sector where dubious decisions and brazen corruption have always ruled. 

There are several aspects in the 2G scam, but I will address two things that are bothering the citizens of India the most. One, how do we recover the money swindled in the 2G scam and two, what needs to be done to ensure such a scam will not happen in the future.

The background to this crime is pretty simple to understand.  It is calculated that loss to government suffered due to the fault ridden First Come, First Served basis for 2G spectrum allocation was Rs. 1,76,000 crores. In simple words, this money Rs. 1, 76,000 crores belongs to the people of India but went into the pockets of colluders in the swindle that includes the Minister, officers, regulators and the beneficiaries who connived in this crime against nation. 

The big question that now needs to be answered is – How did the 2G cellular licenses sold from 2004 to 2007 onwards get the government only Rs 1500 crores each? Is it because the government chose not to tender these and opt for a more dubious route? 

What is the loss to the Government? Assuming that these 2G licenses were to be valued at marginally less than 2G licenses at Rs 10000 crores each (there’s no evidence pointing to a need to assume 2G as cheaper than 3G licenses and using the secondary transactions of Unitech and Swan as benchmarks), the loss to the government is in the region of Rs 50,000 Crores. That’s a realistic estimate and doesn’t include the spectrum given as follow-on spectrum to existing telecom companies. As the International economy was booming in 2007 the proceeds and value would’ve been higher.

Coming to the point of how to recover this swindled money and how to prevent such loot in the future, there are three options:

• Government should not only order forfeiture of the licenses of the erring companies besides making the existing players with excess spectrum pay up at market rates. 
• Government must impose a windfall tax on companies who have made money. 
• Government can cancel all the licenses, take back the spectrum, and sell it at market rates and recover the entire value that was lost.

Now, what needs to be done to prevent such scams in the future?

Scams of such magnitude and scale cannot happen without the active collusion and connivance of ministers, bureaucrats, regulators and the beneficiaries.

• There must be an independent funding of the regulators. Rather them funding them from the union budget there must be a separate source of income, like Universal Service Obligation Fund (USOF), fees from licences, spectrum etc.
• There is a much needed review about the institution of the independent regulators. The practice of stuffing them with retired or serving bureaucrats has made them a second bureaucracy, with little or no will to establish and affirm their independence from politics. 
• The focus must now be to treat this as a crime and investigation launched under the supervision of the Supreme Court to identify all the perpetrators and prosecute them under the law. 
• The institution of independent regulators must be reviewed so that they don’t become passive onlookers to crimes being committed and third, abolishing of all discretionary powers of the ministers that allows them to indulge in corrupt practices.

Can we see Dr. Manmohan Singh, who as the Finance Minister in the 90s, initiated bold economic reforms that unshackled India and paved way for progress to the same and reform the Telecom sector? Do the Prime Minister and the government have the courage to take action against the perpetrators of this white collar crime committed against one billion Indians?

That is a Rs. 17,60,00,00,00,000 question!