By quashing tainted licences, the Supreme Court has come out against arbitrary rule making and discretionary exercise of power.
The most perverse reaction to the Supreme Court order, cancelling all the 122 telecom licenses and 2G spectrum allocations made in January 2008 on a so-called first-come-first-served basis, is that it would dent investor confidence in India. Coming after the Apex Court's Vodafone judgement delivered last month — which was hailed for upholding the letter of the law and not giving any room for creative reading by the revenue authorities — this is a most bizarre and cynical interpretation. By now, it is common knowledge how the then Telecom Minister, Mr A. Raja, subverted all rules by granting licenses bundled with spectrum to new operators without any auctioning. Even the first-come-first-served principle was flexibly changed to favour particular companies by fixing October 1, 2007 as the last date for receiving applications and abruptly advancing it to September 25 without giving any reasons. The revised cut-out date itself was not made public till January 10, 2008 and, on the same day, those qualifying were also given precisely 45 minutes to furnish bank drafts for Rs 1,650 crore as upfront license fees. All this — including the insertion of the new first-pay-first-served rule — was obviously known only to those who were preordained to get the licenses.
By quashing the above licenses, the Supreme Court has come out against arbitrary rule-making and discretionary exercise of power. If anything, it should be welcomed just as the Vodafone verdict: Both are ringing endorsements of the rule of law, which is what investors, foreign or domestic, ought to expect in any country that is not a banana republic. True, there are those – including foreign investors – who forked out huge premiums to pick up stakes in the companies that originally procured the tainted licenses. Now that even these have been declared illegal, they would feel penalised for not having committed any sin themselves. But then, they should have known what they were buying into. Piggybacking on unscrupulous elements with ability to ‘manage' key politicians and officials was always fraught with risk. The latest judgment will hopefully make crony-capitalism all the more risky a strategy.
The cancellation of the licenses, moreover, offers a collateral benefit by way of releasing about 29 per cent of the country's total 2G spectrum, currently available with the new operators who account for hardly 9 per cent of the overall subscriber base. These surplus airwaves can now be offered for auctioning in a transparent manner, wherein everybody — including those whose licenses have been quashed — can participate. It is possible that the winners here could be incumbent operators or even new cash-rich entrants, triggering consolidation in the industry. That, by itself, may not be bad, given the sheer number of operators today. Unviable players may well be forced to exit, especially in a scenario where a sudden freeing up of spectrum renders it no longer a scarce commodity worth holding on to.
Comments:
Your editorial expresses the feelings of a majority of citizens. The telecom companies had to get 2G licenses in a proper manner, by paying the right price and the consumers have to pay a tariff that would allow the telecom companies to earn a reasonable return. This is the essence of fair business. If Raja did not play a fair game, the Supreme Court has come to rescue the situation. Of course, it is unfortunate that some of those who paid money for licenses thinking that that it was a genuine transaction have to suffer due to the SC verdict.
despite all odds and furors of capitalistic -politician class the verdict of supreme court to cancel 122 licenses allotted under UPA-MoT has again maintained the superiority of our constitutional ideals for the stakes of Indians fate and counteract the arbitrary greedy authoritarian acts of our ruler.
Dear Sir:
The editorial on the Supreme Court ruling on 2G is brilliant. A lot of noise is being
made about the effect of the ruling on the confidence of foreign investors. As you
have rightly pointed out, the ruling should enhance their confidence in the system.
We have sent out the message that there is indeed a level playing field and that
there is no room for fixers.
You are absolutely right.
No quarrel with the SC finding the method adopted by A Raja was malafide and struck down as arbitrary , unconstitutional, However, there will be serious problem if FCFS is barred as a route and auction alone is the only method for any government or even private company for allocation. SC judgment implied that the only constitutional method is that all resources be allocated by auctions. Preposterous. Everything cannot be denominated in crores and lakhs. No doubt, auctions are one of the best market mechanisms to discover price. Arbitraging is another. In that case selling of shares by Unitech to NorTel or Tata to Decomo cannot be faulted on the same market principles the SC. SC should know that the mechanism of auction has to be circumscribed by the scarcity value of the resource.
At one extreme, perhaps laughable, level, think of a voter. He has a right to vote according to his wish to any candidate or any party. A poor vo
While it is a welcome situation that the new auctions will determine current market prices for the spectrum now being released( approximately a fourth of the total capacity, one needs to be wary of the possibility that that habitual rabble raisers will once again drum up a story that the rates now arrived at be used for determining the theoretical loss incurred by the Government on the total spectrum allocation right from the beginning. There can be no end to such re-opening of dead issues.With the new auctions determining current prices, the Government should be left free to work forward instead of being engaged in useless Fire Fighting on non-issues. The media also should temper its projection of the issue beyond its justified due.
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