In a two-page written statement he released at a press briefing in New Delhi on April 29, 2011, Union Home Minister P. Chidambaram took strong issue with Dr. Murli Manohar Joshi, Public Accounts Committee chairman and senior BJP leader, for his “gross distortion” of the contents of the January 15, 2008 note that he had sent as the then Finance Minister to Prime Minister Manmohan Singh. He complained that “Mr. M.M. Joshi's draft report...mischievously commented that I had ‘pleaded with the Prime Minister to treat the matter as closed.'”
Taking the offensive, Mr. Chidambaram contended further that “even a person with average intelligence would have noticed that the note did not deal with entry fee at all...it dealt with spectrum charges alone and suggested three measures for raising revenue.” He explained that his note made “the general point, which was the consistent view of the Ministry of Finance, and from which position I never wavered,” was as follows: “Spectrum is a scarce resource. The price should be based on its scarcity value and efficiency of usage. The most transparent method of allocating spectrum would be through auction. The method of auction will face the least legal challenge.”
However, this is an incomplete part of the story. In February 2011, Prime Minister Manmohan Singh revealed the following about the role of the Finance Ministry and the then Finance Minister in the months that followed the January 15, 2008 note.
As the draft PAC Report points out in Para 3.69, the Prime Minister in his interaction with the Editors of the Electronic Media on February 20, 2011, stated: “…This was also discussed with the Finance Ministry because in terms of the Cabinet decision of 2003 the pricing and allocation of Spectrum was to be settled between the Ministry of Finance and the Telecom Department. Initially, of course, the Finance Ministry did ask for a high price of Spectrum but after many discussions, the two ministries agreed that as far as 2G is concerned, we have to live with the present system particularly with regard to the amount of Spectrum that is built and embedded into a license agreement. So this is the background why I did not proceed further with this matter of pricing of Spectrum, because if the Ministry of Finance and Ministry of Telecom both agree and they have the obligation of the Cabinet Decision of 2003 to decide on the matter and also since TRAI is an expert body and Telecom Commission has experts, if all of them are of the same view, I did not feel I was in a position to insist that auctions must be insisted.”
But this was not all. The draft PAC Report, in Para 3.70, quotes Prime Minister as being even more specific in his February 24, 2011 reply in the Rajya Sabha debate on the Motion of Thanks on the President's Address. This was what Dr. Singh said on the role of the Finance Ministry and the then Finance Minister:
“The Leader of the Opposition has alleged that I have distanced myself from key policy decisions and also that the spectrum pricing was decided against the explicit dissent of the then Finance Minister. I regret the attempt to create the appearances of differences through innuendo and misrepresentation. The issue will now be examined by a JPC, and I have no doubt the JPC will bring out the full facts. However, I feel it is only appropriate that I should place the facts before the House, and through the House the people. Since the issues involved are complex, I would not like to take up too much time of the House at this time but state only the essentials.
“The government's policy on the pricing of spectrum was taken on the basis of the Cabinet decision of 2003, which specifically left this issue to be determined by the Ministry of Finance and the Ministry of Telecommunications. Contrary to the assertion of the Leader of the Opposition, the record clearly shows that the then Finance Minister, while he initially had a different view, which he communicated to me on January 15, subsequently consulted with the Minister, Telecommunications and the two Ministers worked out an agreed formula on spectrum charges, which was reported to me in a meeting on July 4, 2008. Furthermore, this decision that was put to me by the two Ministers was in line with the recommendations of TRAI in its report of August 2007. In that report TRAI had clearly stated that only 3G spectrum should be auctioned and the policy for 2G spectrum should continue on the same basis as hitherto. This recommendation of TRAI was based on the need to ensure a level playing field between the new entrants and the incumbents. The two Ministers had agreed on this, because of legacy considerations, and I accepted their recommendation.”