2G scam: Finance Ministry went along with A Raja, DEA tells JPC

NEW DELHI: The Finance Ministry resisted A Raja's decision not to auction the 2G spectrum, but eventually went along Telecom Ministry's views, a presentation by the Department of Economic Affairs before the Joint Parliamentary Committee probing the scandal said on Thursday. 

In what might exacerbate the perceived rift between Finance Minister Pranab Mukherjee and his predecessor, Home Minister P Chidambaram, DEA said that the note Chidambaram sent to the Prime Minister days after the 2008 spectrum allocation recommended that spectrum allocations made in the past be "treated as a closed chapter." That suggestion was in contrast with efforts made by the ministry in the preceding months to secure greater revenues for the exchequer from spectrum allocation. 

"A note was sent by the then Finance Minister to the Prime Minister on January 15, 2008, on the basis of the additional secretary's note and concept paper. An auction-based mechanism was recommended for future allocation of spectrum (beyond the 'start up' spectrum) with the spectrum allocations having been made in the past to be treated as a closed chapter," the DEA presentation said. 

This note was the source of the sharp criticism against Chidambaram by Public Accounts Committee chairman Murli Manohar Joshi's report. In its draft report, PAC said it considered it, "most unfortunate that the Finance Minister, the guardian of public exchequer and entrusted with principal task of mobilisation of resources, pleaded for treating the matter as closed instead of initiating stringent and swift action against those responsible for huge losses to the exchequer." 

Chidambaram had responded then saying it was a distortion of his note and his recommendation was for spectrum usage charges and not for the entry fee. The Prime Minister has maintained that he has acted on the basis of the advice of his ministers. In a series of letters in mid-2007, the Finance Ministry had asked the Department of Telecom to include the issue of spectrum pricing within the ambit of the group of ministers. 

DoT opposed this, saying spectrum pricing is within the normal scope of work carried out by that ministry. The Finance Secretary had brought this issue to the notice of the Cabinet Secretary as well. After several back and forths, in June 2007, DoT argued that spectrum pricing and charges for the use of spectrum was a dynamic issue and must be reviewed and considered from time to time in the context of the changing technology and international practices in consultation with the telecom regulator. "Thereafter, DEA did not take up the issue, either with DoT or with the Cabinet Secretariat," DEA says in the presentation.