How long do we intend to continue to be a Banana Republic of Crony Capitalism, especially in the backdrop of a statement by none other than our Economist Prime Minister on 12th December 2007 in the presence of an International audience “The policy regime for making spectrum available should be fair, transparent, equitable and forward looking.
It should not create entry barriers to newcomers or barriers to the continued growth of the important sector. At the same time, the revenue potential to the government must not be lost sight of. After all, governments across the globe have harnessed substantial revenues while allocating spectrum ($34 in US). In the final analysis, the key issues are correct pricing, fair allocation rules, and a pro-competitive stance.”
Despite that, within minutes of this statement by the PM, the minister in-charge had the temerity to say that he would do what suits him. The rest is history as one might say. Four years on this is what the Supreme Court had to say on the entire Saga.
“Regard being had to the aforesaid precepts, we have opined that auction as a mode cannot be conferred the status of a constitutional principle. Alienation of natural resources is a policy decision, and the means adopted for the same are thus, executive prerogatives. However, when such a policy decision is not backed by a social or welfare purpose, and precious and scarce natural resources are alienated for commercial pursuits of profit maximizing private entrepreneurs, adoption of means other than those that are competitive and maximize revenue may be arbitrary and face the wrath of Article 14 of the Constitution. Hence, rather than prescribing or proscribing a method, we believe, a judicial scrutiny of methods of disposal of natural resources should depend on the facts and circumstances of each case, in consonance with the principles which we have culled out above. Failing which, the Court, in exercise of power of judicial review, shall term the executive action as arbitrary, unfair, unreasonable and capricious due to its antimony with Article 14 of the Constitution”.
Having said that Logic, commonsense defies what continues in the country, despite strictures and observations as well from the Apex Court of the country, there continues a litany of scams equalling any natural disaster. The scams are not restricted to spectrum, but extend to Coal, SEZs< Airports, Commonwealth games and the lease extensions of the iconic Taj Mansingh at Delhi. All because either some politician or his kith and kin holds a sweat equity into any venture.
One would have thought that after the abolition or the Privy Purses in 1971 the Maharaja or the wealth cult would disappear, however what we see after the opening up of the economy 20 years later in 1991 a mushrooming of the nouveau riche and present day maharajas all because of the largesse of the government in distributing all natural resources in a most arbitrary manner to benefit the cronies of those in power throwing all ethics natural justice, rights of the locals to the wind. The old day royalty had some obligation to the subjects; here the present day it is none to nothing except lip sympathy in the form of the Food Security Bill, MNREGA etc, all to buy votes from one term to the other.
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We believe that distribution of any natural resource should be done in a fair and transparent manner. As the natural resource is of, by and for public benefit, hence no one can distribute or sell the public resource for personal benefits.
Fair criteria should be adopted for allocation of natural resources and competitive bidding should be the practice in allocating natural resources for commercial use. According to the key observations drawn out by the Supreme Court on 2nd February 2012 – Natural Resource/Spectrum should be auctioned for providing various telecom services and how the same auction process can be applied to other minerals.
In past, various auctions have been successful like 2001 Licenses Auction and 3G & 4G Auction. In 2010, the 3G and 4G telecom spectrum were auctioned in a highly competitive bidding. Government earned 677.19 billion (US$12 billion) from the 3G spectrum auction. Unlike FCFS process, auction is a fair and a transparent manner to allocate natural resource to the players for various services. The market discovers the price and not an individual. From the past experiences it is clear that Auction is the best way to ensure market orientation and transparency for allocation of natural resources for commercial use.
Apart from Auctioning, if there is another way to maintain transparency, then it should be made known to all. It is completely incorrect to say that auctions are never a success. Also, investor’s should have confidence in the investing industry. In our view, investors are not worried about the auction process but they are more concerned about the uncertainties/mid-way changes in the policy regime.
Lastly, we strongly believe that there is no other way except auctioning where public goods are involved. National Assets of which every Indian citizen has a right must be auctioned be it coal, mines, land etc. Various external consultants make their own spreadsheet type business case, misleading everybody across the board and justify the same to prove that auction is a failure always.
By Brijendra K Syngal (former CMD VSNL)
Views are Personal
editor@telecomlead.com
