Not aware of methods used in FCFS spectrum allocation: PM

"Who got the licences... how FCFS was implemented; this was never discussed with me nor was it brought to the Cabinet. This was exclusively the telecom minister's decision," prime minister Manmohan Singh said in an interaction with the editors from the electronic media

New Delhi: Prime Minister Manmohan Singh today asserted he was not aware of the methodology of the controversial First-Come First-Serve (FCFS) policy followed for second generation (2G) spectrum allocation by disgraced former telecom minister A Raja, which resulted in a huge scam estimated to be up to Rs1.76 lakh crore, reports PTI.

"Who got the licences... how FCFS was implemented; this was never discussed with me nor was it brought to the Cabinet.

This was exclusively the telecom minister's decision," Mr Singh said in an interaction with the editors from the electronic media.

He, however, said that since the ministries of finance and telecom had agreed to continue with the existing policy of allocating 2G spectrum, "I did not feel that I was in a position to insist that auction must be insisted."

The government auditor CAG had estimated a presumptive loss of up to Rs1.76 lakh crore due to sale of spectrum in 2008 at 2001 prices.

This had forced Mr Raja to resign from the Union cabinet in November last year and was followed by his arrest on spectrum 2G scam charges.

On retaining Mr Raja as the telecom minister in the UPA-II, the prime minister said in a coalition government, the choices of the leaders of the alliance partners have to be accepted and that the DMK had suggested Mr Raja and Mr Dayanidhi Maran into the Union cabinet.

"At that moment, there was no reason to feel that anything wrong had been done", the prime minister said.

Mr Singh said in his letter to Mr Raja in November 2007, one of the issues he asked him was to look at "the possibility of technical and legal angle of having an auction of spectrum".

"Mr Raja wrote back to me almost on the same day our letters crossed and he said I (Mr Raja) have been absolutely transparent in my dealings and will be doing so in the future.

"You have my assurance that I have done nothing and will do nothing which will not be consistent with the promise that I make", Mr Singh quoted Mr Raja as replying to his letter.

"As far as auction is concerned he came back to me and said auction is something which has not been suggested by Telecom Regulatory Authority of India (TRAI) and the Telecom Commission," the prime minister said.

"... He (Mr Raja) also said that if we had auction it would not give a level playing field for the new comers because the existing players have got the spectrum free of charge up to a certain mega hertz.

"And therefore he said the TRAI's advice, the Telecom Commission's advice and his (Mr Raja's) own view was that auctions are not the right way forward as far as 2G spectrum is concerned and he also mentioned in a subsequent letter that he is agreeable to auction 3G Spectrum but with regard to 2G spectrum he was very clear that we should stay with the then existing approach", Mr Singh said.

He said this was also discussed with the finance ministry because in terms of the cabinet decision of 2003, the pricing and allocation of the spectrum was to be settled between the ministry of finance and the telecommunication department.

Initially, the ministry of finance did ask for a high price for 2G spectrum but after many discussions that the two ministries agreed that as far as the 2G is concerned they will have to live with the present system, especially with regard to the amount of spectrum built and embedded in the licence agreement.

"So this is the background why I did not proceed with the matter of spectrum allocation because if the MoF and the ministry of telecom both agree and they have the obligation of the Cabinet of 2003 and also TRAI and Telecom Commission, since if all of them were of the same view, I did not think it was right to insist that auction was the right way," Mr Singh said.

On sale of spectrum by some companies after getting its allocation, Mr Singh said he was not aware of their motives.

"I do not know frankly speaking what was the motivation of the people who got spectrum but I do know that as far as the basic policy is concerned that I thought was then the prevailing practice and Mr Raja was continuing that policy.

"As far as who gets licence, the first-come-first-serve policy, how it is implemented, that was never discussed with me, licences were not a matter which ever got referred to me or the Cabinet that was a decision exclusively of the telecom minister.

"Subsequent, events have shown that two companies (Swan and Unitech) sold there equity, but I was told that they have sold it in a manner to dilute equity of the promoters.

"Now, if they have to roll out the requirement and that money can be raised either by way of borrowings or by way of diluting equity by getting people, therefore, at that stage I did not think that I should intervene in that affair," he added.


Inflation to fall to 7% by March, growth will be 8.5%: PM

Addressing editors of the electronic media, prime minister Manmohan Singh said the government is trying to strike a balance between growth and inflation, despite having no control over international events, which are partly fuelling the price rise

New Delhi: Exuding confidence that inflation will fall to 7% by March-end, prime minister Manmohan Singh today said the government was trying to tackle the situation without hurting growth, which he pegged at around 8.5% for the entire fiscal, reports PTI.

Addressing editors of the electronic media, Mr Singh said the government is trying to strike a balance between growth and inflation, despite the government having no control over international events, which are partly fuelling the price rise.

"By the end of this (fiscal) year, inflation rate should come down to no more than 7%," he said.

He said inflation, particularly that of food has been a major concern in recent months, but the government was trying to deal the situation without hurting growth prospects.

Food inflation has been hovering above 15% in the past few months before falling to 13.07% in the last week of January.

Mr Singh said the government is trying its best to deal with inflation, but "we don't have at our disposal" instruments to insulate the Indian economy from international events such as the developments in Egypt, which have resulted in spiralling crude oil prices.

"We don't have control over international events... oil prices are rising, food prices are also rising," Mr Singh said.

Commenting on economic growth, Mr Singh said India has done well to come out of the aftermath of the global financial crisis and "our economy is in a good shape. We will have a growth rate of 8.5% this fiscal year."


Annul S-band spectrum deal between Antrix and Devas: Space Commission to CCS

The Space Commission made this recommendation in a note to the CCS, saying priority is required to be given to the country's strategic requirements including societal ones

New Delhi: The Space Commission has recommended to the Cabinet Committee on Security (CCS) that the controversial S-band spectrum deal between Indian Space Research Organisation's (ISRO) commercial arm Antrix and private firm Devas Multimedia be immediately annulled, reports PTI.

The Space Commission made this recommendation in a note to the CCS, saying priority is required to be given to the country's strategic requirements including societal ones. The CCS is chaired by prime minister Manmohan Singh.

The Department of Space may take necessary steps and give instructions for scrapping the Antrix-Devas agreement, according to the Commission's draft note.

According to sources in the know, K Radhakrishnan, secretary, Department of Space, wrote a letter to DR Meena, secretary, ministry of law and justice in this regard.

The annulment comes in the wake of a raging controversy over the deal for handing over 70 Mhz of S-band spectrum to the private firm for Rs1,000 crore on which the Comptroller and Auditor General (CAG) has already initiated action.

According to news reports, this deal could have resulted in a loss of Rs2 lakh crore to the exchequer.

Following these reports, the government and ISRO said that the project was already under review and action has been initiated for termination of the contract.

"In consultation with the ministry of law and justice and the additional solicitor general, it was proposed to place the matter before the CCS for a decision," the letter by Mr Radhakrishnan said.

The draft note for the CCS, which is likely to be placed at its next meeting, has been approved by the prime minister, who is understood to have directed that the view of the ministries concerned may be obtained.

According to the draft note, the agreement for the lease of space segment capacity on ISRO/Antrix S-Band Spacecraft by Devas Multimedia that was entered on 28 January 2005 needs to be annulled in view of priority to be given to the nation's strategic requirements including societal ones.

The agreement calls for payments by Devas to Antrix of an up-front capacity reservation fee of $40 million for two satellites and lease charges of $18 million per year during the operational life of the satellites, which will be enhanced by 25%, when Devas becomes cash flow positive.

"As of now Devas has paid Antrix a total amount of Rs58.38 crore as the first instalment of the upfront capacity reservation fee for PS-1 (in June 2006) and PS-2 satellites (in June 2007)," the draft note said.

The space segment capacity to be leased to Devas as per the Antrix-Devas agreement would take away 80 Mhz of S-band spectrum available with ISRO, for the life of 12 years of each satellite.

"...Such a dispensation might not ensure a level-playing field for the other service providers using terrestrial spectrum, especially considering the significant demand for this S-band spectrum and the current trends on the prices," the note said.

As per the auction of third generation (3G) spectrum held last year, 5 Mhz of spectrum cost over Rs16,800 crore for pan-India licence.

According to the draft note, the ministries of law and justice and telecommunications had stated in their views that the deal between Antrix and Devas may be annulled to preserve the precious S-band spectrum for strategic requirements of the nation and to ensure level-playing field for other service providers.

The ministry of law and justice, had said in its letter on 18 June 2010, "...the central government (Department of Space) in exercise of its sovereign power and function, if so desire and feel appropriate, may take a policy decision to the effect that due to the needs of strategic requirements, the central government/ISRO would not be able to provide orbital slot in S-band for operating PS-1 to the Antrix for commercial activities."

In that event, Antrix may terminate the agreement and inform Devas accordingly, it said adding on such termination "Antrix shall be required to reimburse Devas all the upfront capacity reservations fees and corresponding service taxes received by Antrix till date..."

Similarly, the Department of Telecom (DoT) in two separate letters of 6 July 2007 and again on 28 July 2010 had objected to such deal and was against lease of spectrum.

"The spectrum planned by Department of Space for strategic use is not to be shared with commercial applications as in the case of Devas multimedia...." the DoT had said in its first letter.

In its second letter of 28 July 2010, the DoT reiterated that terrestrial component of such frequencies should also be given "similar treatment as in the case of 3G and BWA (Broadband Wireless Access) spectrum with regard to pricing and auction mechanism and auction should be adopted for fair spectrum allocations..."

The opinions of the two ministries were endorsed by the additional solicitor general of India who said in its letter dated 12 July 2010 that the agreement was entered between Antrix and Devas, way back in the year 2005, the circumstance was vastly different that what it is today.

While endorsing the opinion of two ministries to cancel the contract, the additional SG said that "it will be advisable from a legal perspective that that direct (for cancelling the contract) comes from the Department of Space on the basis of a governmental policy decision" and not from Antrix.

Keeping all this in mind, the DoS has moved a note for consideration of CCS for annulment of the Antrix-Devas deal, the draft note said.


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