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Updated: January 12, 2012 01:25 IST

Telecom department violated Cabinet decision on 2G: Finance Ministry official

Special Correspondent
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Economic Affairs Secretary R. Gopalan appeared before the Joint Parliamentary Committee probing the 2G issue, on Wednesday. File photo
The Hindu Economic Affairs Secretary R. Gopalan appeared before the Joint Parliamentary Committee probing the 2G issue, on Wednesday. File photo

Why did DoT have sole say in fixing of spectrum prices, JPC asked Economic Affairs Secretary R. Gopalan

In a further embarrassment to the UPA government, a top official of the Finance Ministry told the Joint Parliamentary Committee (JPC) here on Wednesday that the Department of Telecommunications (DoT) had clearly violated a Cabinet decision in awarding 2G spectrum licences in early 2008.

The Cabinet had stipulated in 2003 that the price of 2G spectrum be fixed in consultation between the Telecom department and the Finance Ministry. The decision was also part of the terms of reference of a Group of Ministers (GOM) constituted in February 2006 by Prime Minister Manmohan Singh to consider release and pricing of additional spectrum.

Economic Affairs Secretary R. Gopalan, who appeared before the Committee, was questioned closely how and why the DoT was allowed to have the sole say in the fixing of prices.

The Comptroller and Auditor General had pegged a “notional loss” of Rs.1.76 lakh crore to the exchequer on account of the award of licenses at the prices pegged in 2001.

The line of questioning by members of the JPC and Mr. Gopalan's revelation that the DoT decision was in violation of the Cabinet's orders assumes significance in view of the recent political controversy over the role of the Finance Ministry in the award of the spectrum licences.

Controversial note

A note sent by the Finance Ministry to the PMO in the last week of March 2010, subsequently released in September, 2010, in response to an RTI petition, caused a political storm for two reasons. It categorically noted that Mr. Chidambaram, who was Finance Minister in 2008, could have insisted on the auctioning of 2G spectrum licences. In addition, it said the note had been “seen” by the present Finance Minister, Pranab Mukherjee.

The political crisis that arose within the UPA on account of the note subsided after Mr. Mukherjee said, in a joint appearance with Mr. Chidambaram, that though he had seen the note, he did not subscribe to the view that the Minister should have insisted on auctioning of 2G spectrum licences.

The Finance Ministry official had no explanation before the JPC how the issue of pricing in the terms of reference of the GoM was deleted after nearly ten months. Mr. Gopalan reportedly told the Committee that the issue was deleted at the behest of the then Telecom Minister Dayanidhi Maran.

‘Stay order unheeded'

The official had no answers also to specific questions why the Finance Ministry did not inform the DoT that keeping it out of pricing went against the Cabinet decision. It appears that the then Finance Secretary, D. Subbarao, had specifically maintained in a November 2007 letter that all further action on awarding of 2G licences be stayed, but it was not heeded.

The official, who was also questioned why the Ministry did not share its March 2010 note to the PMO with the JPC, reportedly told the members that the Ministry did not deem it “necessary” to share it.

‘Joint effort'

He informed the JPC that the note was a “joint effort” by various Ministries to harmonise the available facts.

Most of the questions during Wednesday's meeting were asked by members of the Opposition parties. UPA members on the Committee would take their turn on Thursday.

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