Marxists allege $13-bn scam in India’s spectrum allocation

November 6th, 2008 - 4:53 pm ICT by IANS  

New Delhi, Nov 6 (IANS) Taking the recent stake sale by Swan Telecom and Unitech as case points, the Communist Party of India-Marxist (CPI-M) has alleged a major scandal in the latest round of radio frequency allocation to mobile telecom operators.The party said in a statement Thursday that the “first-come-first served” principle adopted by the United Progressive Alliance (UPA) government had also resulted in a loss of Rs.60,000 crore (Rs.600 billion/$13.2 billion) to the exchequer.

“The CPI-M is shocked that the UPA government, instead of addressing the huge scam that has taken place in the allocation of the fourth licence in 2G mobile services, has taken the position that nothing needs to be done,” the party statement said.

The CPI-M said while the mobile phone licences were priced at 2001 levels to keep the costs low for the consumers, this was not ensured through the licence terms, due to which successful parties sold their shares at huge profits.

Swan Telecom, for example, bought a licence for 13 circles along with the necessary spectrum for Rs.15.37 billion ($340 million). Subsequently, it sold 45 percent of its stake to UAE’s Etisalat for $900 million, taking its book value to $2 billion.

Similarly Unitech did not spend a single rupee for executing its licence but sold a 60-percent stake to Norway’s Talenor for Rs. 61.20 billion, while paying only Rs.16.51 billion as licence fee, the party said.

“The government has actually got only one-sixth of what it would have got, had it gone through a fresh auction route - a loss of Rs.100 billion to the exchequer on account of Swan and Unitech licences alone,” the CPI-M said.

“The issue is: If scarce national resources are given away at throwaway prices and these are then sold at many times that price, what should the government do?” the party queried.

“It should either invoke fair trade practice/anti-monopoly sections, or look at other operative sections of the licence to see how this can be prevented. If no other recourse is available, it must levy a windfall tax on such speculative transactions.”

The party said that with the stage set for auctioning licences for third-generation telephony, the government must ensure that adequate provisions are put into the licence terms and conditions so that another fiasco can be avoided.

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