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Probe Rs 60,000-crore spectrum scam, says CPI(M)

A Correspondent in New Delhi | November 06, 2008 13:24 IST

The Communist Party of India (Marxist) has demanded an enquiry into what it claims is a Rs 60,000 crore (Rs 600 billion) financial scam involving the manner in which 2G spectrum was allocated by the Union ministry of communications.

In a statement issued on Thursday, the CPI(M) said that the United Progressive Alliance government had given away scarce spectrum at a fraction of the market price leading to heavy revenue losses to the nation.

'It is now clear from the sale of shares by Swan and Unitech that more than Rs 60,000 crore has been lost to the national exchequer by giving away scarce spectrum at a fraction of the market price. The CPI(M) is shocked that the United Progressive Alliance government, instead of addressing the huge scam that has taken place on the allocation of the fourth licence in 2G mobile services has taken the position that nothing needs to be done,' the statement said.

'For the release of the fourth licence and the spectrum required, the Communications ministry adopted a completely inexplicable principle of 'first come first served' for allocating the licence as well as a licence fee based on 2001 price. These 2G licences were priced at 2001 levels, allegedly to keep the costs low for the consumers. However, this was not ensured through the licence terms and conditions. As a result, the parties who had secured these licences have sold or are selling their shares at huge profits,' the CPI(M) has claimed.

The CPI(M) has raised questions over the deal between the United Arab Emirates' telecom operator Etisalat and Swan Telecom, and Unitech and Talenor (of Norway).

'Swan Telecom bought a licence for 13 circles along with the necessary 2G spectrum for a paltry Rs 1,537 crore (Rs 15.37 billion). Subsequently, it has sold 45 per cent of its stake to Etisalat for $900 million, taking its book value to $2 billion. This is without putting up any infrastructure, let alone starting operations,' the CPI(M) statement alleges.

The statement goes on to say that the 'Unitech-Talenor deal is no different. Unitech, like Swan, had not spent a single paisa for executing its licence. It has now sold 60 per cent of its stake to Talenor for Rs 6,120 crore (Rs 61.20 billion) while paying only Rs 1,651 crore (Rs 16.51 billion) as licence fee. The government has actually got only one-sixth of what it would have got, had it gone through a fresh auction route -- a loss of Rs 10,000 crore (Rs 100 billion) to the exchequer on Swan and Unitech licences alone.'

Claiming that the total loss to the exchequer of giving away 2G GSM spectrum in this manner, including to the CDMA operators, amounts to more than Rs 60,000 crore and is 'one of the biggest financial scams' in the country, the Left party has expressed surprise at the UPA's handling of the situation.

The CPI(M) said that the government needs to look into why scarce national resources were given away at throwaway prices to private parties who have profited immensely from this move. The Leftists have demanded that the government should either invoke fair trade practice/anti-monopoly sections or look at other operative sections of the licence to see how this can be prevented. 'If no other recourse is available, it must levy a windfall tax on such speculative transactions,' the CPI(M) said.

The Leftist have also said that the issue of allotting 3G licences too should be done in a transparent manner.

The CPI(M) also alleged that one telecom company was reportedly 'using the difference of revenue shares between different applications -- mobile, long distance and Internet -- to under-report its earnings, seriously impacting the government's revenue share'.

The CPI(M) said that an enquiry should be held in this affair and measures must be taken so that such a situation does not recur.

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