Sukh ram, pramod mahajan, arun shourie, dayanidhi maran, a. Raja...
growth of corruption in the telecom sector has certainly kept pace with the fast growing subscriber base, feels Sutanu Guru. none of the corporate entities nor a single minister has been made to pay till now, he further points out
The more things change, the more they remain the same. I still remember the spring of 1996 when the name Raja had more traditional connotations. The cricket World Cup was on in the Indian sub-continent and fans were praying for Sachin Tendulkar to work his magic so that India could lift the Cup. The Central government - riddled, assaulted and besieged by scams and scandals - was paralysed and as lame duck as a duck can be lame. And of course, even as cricket fever was hotting up, Indian citizens were both horrified and titillated by a strange piece of news. Sukh Ram, who had presided over the first auction of mobile telephony services in India in 1995 as Union telecom minister till he was "reshuffled", was arrested for a 'telecom' scam. Forget the names of the other players involved; they really don't matter anymore. But guess what, the estimated loss to the exchequer was about Rs 1.7 crore. Yes, the money lost by the government was a paltry Rs 1.7 crore!
But you must remember, Sachin Tendulkar was then earning a pittance for endorsements compared to the upwards of Rs 100 crore he makes nowadays. And of course, like in 1996, India still adores its favourite cricketer as the nation hopes he will win the Cup for India. And yes, the cricket World Cup is back in the sub-continent. It is also spring and the season for the flowers to bloom. Of course, like 15 years back in 1996, it is also the season for scams and scandals to bloom in such a manner that the Central government appears more paralysed than a lame duck. The more things change, the more they remain the same. The only difference is what you and I can call the impact of 'inflation' while measuring the magnitude of the scams. In 1996, it was alleged that Sukh Ram was responsible for the State losing Rs 1.7 crore in revenue. In 2011, the CAG estimates that another former telecom minister A. Raja is probably responsible for the State to lose Rs 1.7 lakh crore — ten thousand times more than the loss in 1996. In a perverse way, you could use that to applaud the manner in which the Indian economy has grown in this era of crony capitalism masqeurading as liberal economic policies with a special emphasis on the aam aadmi.
In 1996, Sukh Ram was accused of changing rules and goalposts to favour companies close to him. In the 1995 auction of mobile phone services, a then unknown entity called Himachal Futuristic Communications Ltd (Sukh Ram belongs to Himachal Pradesh) had shocked India Inc. by bidding huge amounts for telecom circles. When it became clear that the company could not pay the license fee and stood to forfeit its bank guarantee, Sukh Ram allegedly changed policy in a way that a company could get only three circles. Himachal Futuristic is still a player in the business. It shot back into limelight last year when a group company Infotel successfully bid for 22 circles for Broadband Wireless Access (BWA). Intriguingly, Infotel sold its majority stake soon after to a company controlled by Mukesh Ambani. Of course, you are quite familiar with how Raja bent, broke and changed rules to suit the interests of corporate houses he favoured. But did you happen to know that his predecessor and another DMK leader Dayanidhi Maran (whose brother controls the Sun Network) handed out 27 licences during his tenure and that 14 of them went to Aircel? Didn't I say that the more things change, the more they remain the same?
Let us take the Sukh Ram - A.Raja comparison a bit further. Sukh Ram was arrested in February, 1996, and eventually convicted in 2009. He is out on bail as his appeal is pending in the Delhi High Court. He still vociferously defends his controversial track record (See Exclusive Interview). A. Raja too has been arrested recently. The question is that will another journalist interview Raja 15 years hence in 2026 while he enjoys bail and vociferously defends his controversial track record? The way our Indian 'demonocracy' (an apt term coined by my editor-in-chief) is, don't be surprised if that scenario actually turns out to be true.
I won't bore you with the gory details of the 2G scam and the unending brouhaha that goes on around it. It is enough to realise that Indian democracy is in urgent and dire need of serious efforts and reform. My colleague interviewed N. Vittal - who was telecom secretary when Sukh Ram was telecom minister - in his modest apartment in Chennai (See Exclusive Interview). The 73-year-old Vittal, who created history as the Chief Vigilance Commissioner by posting the names of bureaucrats accused of corruption on the official CVC Website, is clinical as usual when he assesses the state of the State: "I had multiple problems in my body a few years back. Many experts coordinated their diagnosis and treatments for my recovery. India as a body politic now suffers a multiple organ failure of governance. 2G represents this."
There are a few things about the telecom scam you should know which have been sidelined in the run-up to the arrest of A. Raja, the voyeuristic tattles resonating in the media thanks to the leak of the Radia tapes and the persistent threats of Opposition parties to paralyse working of Parliament if their demand for a JPC is not met. Most interesting is the manner in which the BJP is acting holier than thou. Since public memory is short, let me remind you of a few interesting things that happened to the telecom sector when the BJP-led NDA alliance was in power at the Centre. Jagmohan was the telecom minister and even as he was being eased out from the ministry, the government changed the licence fee regime to a new revenue sharing regime in 1999. This was a highly controversial move then though there are many who still agree that freeing the mobile operators from the burden of paying huge licence fees every year to the government enabled them to lower tarriffs and trigger the real telecom revolution. That may be so. But when the late Pramod Mahajan was the telecom minister, Reliance made a blatant back door entry into the telecom sector in a manner everybody acknowledges was unethical and almost certainly illegal. Essentially, Reliance launched de facto mobile phone services across India without paying a single Paisa as licence fee even as other operators like Bharti, Hutch, BPL and others had paid thousands of crores as licence fees. This 'free' backdoor entry enabled Reliance to launch that famous campaign that promised a mobile call at 40 Paisa per minute. Pramod Mahajan was replaced by the so-called incorruptible Arun Shourie as telecom minister. In his tenure, Reliance was not penalised for its sins. It was just asked to pay a licence fee and continue operating as if nothing had happened. Basically, whether it is the Congress or the BJP, you could say that each had its own set of favourites and each bent and broke rules whenever convenient.
Another interesting thing about the fascinating telecom sector is the manner in which established business houses have clawed back into the game after losing out completely in the early years of mobile telephony in India. For a few years after mobile services were launched in India, the big players were BPL, Bharti, Max, Usha and a few others. The Tatas, Birlas and Ambanis were not considered serious players. But look at the secenario now. Barring Vodafone (which is a multinational and which has allegedly defrauded the Indian exchequer to the tune of $2 billion in unpaid taxes) and Sunil Mittal of Bharti, the big boys of Indian telecom are Ratan Tata, Kumarmangalam Birla and Anil Ambani (with Mukesh Ambani expected to join that big league soon with a broadband wireless access network). So, in a way, the Empire of India Inc. is striking back as seen in the case of the telecom sector. Analysts used to say that liberal economic policies led to a blossoming of entrepreneurs who had no chance in the earler era of licence permit raj. Sadly, discretionary and arbitrary decisions by minister after minister holding portfolio after portfolio seem to be getting worse forms of the license permit raj back into the picture.
The last thing I would like to highlight in this sleazy saga is a lament that will soon be forgotten. There is little doubt that Indian telecom has been a success story. From zero in 1995 to 700 million subscribers in 2011 is no mean achievement. But even as this sector blossomed, the two state-owned entities of MTNL and BSNL seem to be in terminal decline. They are taking suicidal decisions that are inexplicable and meant only to benefit private sector players.
And of course, as mentioned earlier, the telecom sector and the 2G scam is just an example and a manifestation. Similar examples abound in virtually every sector in India. In the coming weeks, watch out for a TSI story on how crony capitalism ensured that private airlines benefitted immensely even as the state-owned Air India - like BSNL and MTNL - followed a suicidal path towards destruction and bankruptcy. And do remember that like telecom, aviation is also considered a success story in India!
For More IIPM Info, Visit below mentioned IIPM articles.
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Management Guru Arindam Chaudhuri Dean Business School IIPM
IIPM Excom Prof Rajita Chaudhuri
IIPM: What is E-PAT?
'Thorns to Competition' - You can order your copy online from here
IIPM Mumbai Campus
But you must remember, Sachin Tendulkar was then earning a pittance for endorsements compared to the upwards of Rs 100 crore he makes nowadays. And of course, like in 1996, India still adores its favourite cricketer as the nation hopes he will win the Cup for India. And yes, the cricket World Cup is back in the sub-continent. It is also spring and the season for the flowers to bloom. Of course, like 15 years back in 1996, it is also the season for scams and scandals to bloom in such a manner that the Central government appears more paralysed than a lame duck. The more things change, the more they remain the same. The only difference is what you and I can call the impact of 'inflation' while measuring the magnitude of the scams. In 1996, it was alleged that Sukh Ram was responsible for the State losing Rs 1.7 crore in revenue. In 2011, the CAG estimates that another former telecom minister A. Raja is probably responsible for the State to lose Rs 1.7 lakh crore — ten thousand times more than the loss in 1996. In a perverse way, you could use that to applaud the manner in which the Indian economy has grown in this era of crony capitalism masqeurading as liberal economic policies with a special emphasis on the aam aadmi.
In 1996, Sukh Ram was accused of changing rules and goalposts to favour companies close to him. In the 1995 auction of mobile phone services, a then unknown entity called Himachal Futuristic Communications Ltd (Sukh Ram belongs to Himachal Pradesh) had shocked India Inc. by bidding huge amounts for telecom circles. When it became clear that the company could not pay the license fee and stood to forfeit its bank guarantee, Sukh Ram allegedly changed policy in a way that a company could get only three circles. Himachal Futuristic is still a player in the business. It shot back into limelight last year when a group company Infotel successfully bid for 22 circles for Broadband Wireless Access (BWA). Intriguingly, Infotel sold its majority stake soon after to a company controlled by Mukesh Ambani. Of course, you are quite familiar with how Raja bent, broke and changed rules to suit the interests of corporate houses he favoured. But did you happen to know that his predecessor and another DMK leader Dayanidhi Maran (whose brother controls the Sun Network) handed out 27 licences during his tenure and that 14 of them went to Aircel? Didn't I say that the more things change, the more they remain the same?
Let us take the Sukh Ram - A.Raja comparison a bit further. Sukh Ram was arrested in February, 1996, and eventually convicted in 2009. He is out on bail as his appeal is pending in the Delhi High Court. He still vociferously defends his controversial track record (See Exclusive Interview). A. Raja too has been arrested recently. The question is that will another journalist interview Raja 15 years hence in 2026 while he enjoys bail and vociferously defends his controversial track record? The way our Indian 'demonocracy' (an apt term coined by my editor-in-chief) is, don't be surprised if that scenario actually turns out to be true.
I won't bore you with the gory details of the 2G scam and the unending brouhaha that goes on around it. It is enough to realise that Indian democracy is in urgent and dire need of serious efforts and reform. My colleague interviewed N. Vittal - who was telecom secretary when Sukh Ram was telecom minister - in his modest apartment in Chennai (See Exclusive Interview). The 73-year-old Vittal, who created history as the Chief Vigilance Commissioner by posting the names of bureaucrats accused of corruption on the official CVC Website, is clinical as usual when he assesses the state of the State: "I had multiple problems in my body a few years back. Many experts coordinated their diagnosis and treatments for my recovery. India as a body politic now suffers a multiple organ failure of governance. 2G represents this."
There are a few things about the telecom scam you should know which have been sidelined in the run-up to the arrest of A. Raja, the voyeuristic tattles resonating in the media thanks to the leak of the Radia tapes and the persistent threats of Opposition parties to paralyse working of Parliament if their demand for a JPC is not met. Most interesting is the manner in which the BJP is acting holier than thou. Since public memory is short, let me remind you of a few interesting things that happened to the telecom sector when the BJP-led NDA alliance was in power at the Centre. Jagmohan was the telecom minister and even as he was being eased out from the ministry, the government changed the licence fee regime to a new revenue sharing regime in 1999. This was a highly controversial move then though there are many who still agree that freeing the mobile operators from the burden of paying huge licence fees every year to the government enabled them to lower tarriffs and trigger the real telecom revolution. That may be so. But when the late Pramod Mahajan was the telecom minister, Reliance made a blatant back door entry into the telecom sector in a manner everybody acknowledges was unethical and almost certainly illegal. Essentially, Reliance launched de facto mobile phone services across India without paying a single Paisa as licence fee even as other operators like Bharti, Hutch, BPL and others had paid thousands of crores as licence fees. This 'free' backdoor entry enabled Reliance to launch that famous campaign that promised a mobile call at 40 Paisa per minute. Pramod Mahajan was replaced by the so-called incorruptible Arun Shourie as telecom minister. In his tenure, Reliance was not penalised for its sins. It was just asked to pay a licence fee and continue operating as if nothing had happened. Basically, whether it is the Congress or the BJP, you could say that each had its own set of favourites and each bent and broke rules whenever convenient.
Another interesting thing about the fascinating telecom sector is the manner in which established business houses have clawed back into the game after losing out completely in the early years of mobile telephony in India. For a few years after mobile services were launched in India, the big players were BPL, Bharti, Max, Usha and a few others. The Tatas, Birlas and Ambanis were not considered serious players. But look at the secenario now. Barring Vodafone (which is a multinational and which has allegedly defrauded the Indian exchequer to the tune of $2 billion in unpaid taxes) and Sunil Mittal of Bharti, the big boys of Indian telecom are Ratan Tata, Kumarmangalam Birla and Anil Ambani (with Mukesh Ambani expected to join that big league soon with a broadband wireless access network). So, in a way, the Empire of India Inc. is striking back as seen in the case of the telecom sector. Analysts used to say that liberal economic policies led to a blossoming of entrepreneurs who had no chance in the earler era of licence permit raj. Sadly, discretionary and arbitrary decisions by minister after minister holding portfolio after portfolio seem to be getting worse forms of the license permit raj back into the picture.
The last thing I would like to highlight in this sleazy saga is a lament that will soon be forgotten. There is little doubt that Indian telecom has been a success story. From zero in 1995 to 700 million subscribers in 2011 is no mean achievement. But even as this sector blossomed, the two state-owned entities of MTNL and BSNL seem to be in terminal decline. They are taking suicidal decisions that are inexplicable and meant only to benefit private sector players.
And of course, as mentioned earlier, the telecom sector and the 2G scam is just an example and a manifestation. Similar examples abound in virtually every sector in India. In the coming weeks, watch out for a TSI story on how crony capitalism ensured that private airlines benefitted immensely even as the state-owned Air India - like BSNL and MTNL - followed a suicidal path towards destruction and bankruptcy. And do remember that like telecom, aviation is also considered a success story in India!
For More IIPM Info, Visit below mentioned IIPM articles.
Arindam Chaudhuri is Delhi franchise holder for i1 Super Series
Management Guru Arindam Chaudhuri Dean Business School IIPM
IIPM Excom Prof Rajita Chaudhuri
IIPM: What is E-PAT?
'Thorns to Competition' - You can order your copy online from here
IIPM Mumbai Campus
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Rashmi Bansal Publisher of JAMMAG magazine caught red-handed, for details click on the following links.
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