Union Home Minister P. Chidambaram on Friday termed BJP leader and Public Accounts Committee (PAC) chairman M.M. Joshi's draft report on the 2G spectrum allocation scam a “gross distortion” of the January 15, 2008 note which he had submitted to Prime Minister Manmohan Singh as the then Finance Minister.

In a two-page written statement, the Home Minister countered charges made by the BJP that both he and the Prime Minister had “direct complicity” in the scam. Mr. Chidambaram said the draft report “mischievously” commented that he had pleaded with the Prime Minister to treat the matter as closed without saying what the ‘matter' was.

Three elements

He said the January 15, 2008 note on ‘Spectrum charges,' briefly traced the history of licences issued since 1994 and in paragraphs 2 and 7, pointed out that there were three separate elements: entry fee; charges for spectrum; and revenue share (also called licence fee).

Mr. Chidambaram said the note was sent after the disputed Letters of Intent were issued on January 11, 2008. “As Finance Minister, I was concerned with raising revenues. Hence the note contained suggestions on raising additional resources through the allocation of spectrum,” he said.

Stating that the controversy and the allegations were about entry fee and whether new licences should have been granted on January 10, 2008 at the old entry fee of Rs. 1,651 crore, he said the note did not deal with entry fee or revenue share. “It dealt solely with charges for spectrum, also known as spectrum usage charges. I am constrained to observe that even a person with average intelligence would notice that the note dealt only with spectrum usage charges,” he said.

The Home Minister said the note made three specific suggestions for raising additional revenue. They were: price for additional spectrum should be discovered through an auction and, once such price was discovered, additional spectrum should be allocated to all bidders at that price; if a licensee sold his licence (including the spectrum), it should be stipulated that the licensee should share a part of the premium/profit with the government; and in cases where some licensees already held spectrum over and above the start-up spectrum, payments made in the past for additional spectrum may be treated as charges for the past period and the past may be treated as closed, but prospectively, such licensee should pay for the additional spectrum that he holds over and above the start-up spectrum at the price discovered in the auction.

Transparent method

Mr. Chidambaram said the January 15, 2008 note also made the general point, which was the consistent view of the Ministry of Finance, and from which position he has never wavered, that: “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.”

As Mr. Joshi's draft report was rejected on Thursday by 11 out of the 21 members of the PAC, Mr. Chidambaram said he had no further comment to make on it.

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