Monday, July 11, 2011

JPC told that losss due to licence waiver is Rs 43,000 cr

Telecom rejected finance ministry suggestions, cabinet agreed with telecom

New Delhi: Secretary for department of economic affairs in the ministry of finance briefing the joint parliamentary commitee (JPC) probing the 2G spectrum scam told that the 'financial implication' – that is, revenue loss to government because of licence fee waiver for operators migrating to the unified access system (UAS) was about Rs 43,000 crore.

JPC chairman P.C.Chacko briefing journalists on June 30 evening said the ministry of finance was of the opinion with regard to the new telecom policy of 1999 – which falls in the NDA period – was that there should be a 'transparent rationing through auciton' where the demand for spectrum outstripped supply. But the department of telecom (DoT) did not agree to this.

The finance ministry had also suggested that the existing (at the time) licence holders should forfeit their old licences if they failed to roll out services. But the DoT vetoed the idea. Instead, the DoT did not charge any new fee for the old players, and they were allowed to migrate to UAS almost free of cost. There was a two per cent decrease in revenue from 2004 to 2007. The financial implication – the euphemism that Chacko used for losses – was Rs 968 crore per year from 2004 to 2007, and Rs 885 cr every year after that.

The DoT was even indulgent towards the existing licence holders. The cellular licencees were given an extension of their license fee period from 10 to 20 years and the basic service providers were given an extension of their license period from 15 to 20 years in the new system.

Another major issue was that of spetcrum pricing. The ministry of finance wanted it to be part of the terms of reference for the group of secretaries and then the group of ministers. But the DoT puts its foot down again, and argued that the pricing of spectrum was the prerogative of the administrative ministry concerned – in this instance, the ministry of telecom.

Finally, the cabinet approved the DoT's position and it was given a go ahead.

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