The order of the Supreme Court squashing 122 2G licences issued when A Raja was the telecom minister sends a clear and strong message to the government and corporate world that probity in public life and business ethics are values that cannot be scuttled.
The order has struck a firm blow on the chin of the politician-businessman nexus and will have far reaching implications on the manner in which certain corporate houses do business. It also sets the ground rules for the government, which is a custodian of national resource, in this case 2G spectrum. The order, once and for all, establishes that investment, no matter how large, cannot be used as an excuse to perpetuate a wrong deed.
The order, firstly, directs the UPA government, which dithered in taking any action even after the scam was exposed by the Comptroller and Auditor General, to act resolutely and secondly, brings about more clarity on the 2G spectrum issue. The Telecom Minister, Mr Kapil Sibal may have chosen a convenient interpretation of the judgement when he told the media that it does not indict the government or the then finance minister, Mr P Chidambaram. The fact is a policy of the government – first come first serve basis, has been struck down as unconstitutional and the argument that selling spectrum at lower prices had resulted in a phenomenal expansion of the telecom sector, rejected by the two justices – G S Singhvi and A K Ganguly. Taken together with the landmark judgment favouring Vodafone which had challenged the tax demand of `11,217 crore, it shows that the court is neither anti-industry nor on a witch hunt, but will determine each case on merits.
It is a year since A Raja was arrested and his defence team will be burning the midnight oil in the changed circumstances. The Supreme Court order lays the blame for the mess and corruption at Raja’s table, stating that the then minister had ignored the advice of the PMO and the law ministry and virtually gifted away an important national asset at a throwaway price. As for Mr Chidambaram, the date of reckoning has been deferred. The court refrained from deciding on Janata Party president, Mr Subramanium Swamy’s petition which had demanded a CBI probe into the former finance minister’s role in the scam and left the job to the special CBI court.
Barring the prosecution of those guilty of this mess, the order, in a way, has nudged the case closer to its logical conclusion. By declaring the first-come-first-serve-basis as unconstitutional and bad in law, the court has set the benchmark for future deals. However, by insisting that auction is the best route, the court may have strayed into the jurisdiction of the executive and its right to determine policy. But this was necessary when one considers the nexus between corporate world and the government and the general perception that those closest to the government benefit the most.
The repercussion of the order will be felt by telecom companies which were beneficiaries of the 2G licences, banks exposed to the sector and the consumer who has had to pay the lowest tariffs in the world, thanks to the large number of operators and intense competition. Those companies directly affected will, in all probability, file review petitions. The shutting down of operations in 122 circles could jeopardize 10,000 jobs and affect millions of consumers who will be left with no option but to take the portability route to new service providers. In other words there could be large scale disruption of telecom services in the affected circles.
The central government has its work cut out for it. The Supreme Court has set a four month deadline to cancel and re-auction the licences. Ironically, after blaming TRAI for wrongly advising the government to use 2001 prices as the base for giving away the 2G licences, the court has asked it to recommend an auction plan. The four-month window is relatively small for a complex issue like 2G, but it is also an opportunity for the government to retrieve lost ground.
