The Telegraph
Monday , October 15 , 2012
Since 1st March, 1999
CIMA Gallary


Even by the standards of Indian politicians A. Raja is a distinguished man. He actually suffered incarceration for his crimes. The illegal gains he made will presumably go into the Central government’s coffers. His beneficiaries lost their licences, with no compensation. That would be unfair, even to bribe givers. The committee appointed by the Central cabinet to deal with the situation has recommended that the government refund to the 122 licence holders the fees they originally paid, without interest, unless they face criminal charges. It is unknown what crimes they committed, but the government will no doubt discover some to save money. The group of ministers has also recommended that telecommunications operators be allowed to keep 4.4 MHz or 2.5 MHz free of cost, depending on whether they provided GSM or CDMA services, and that they pay a lump sum for any excess. It makes no distinction among operators on the basis of the date on which they got licences. The rent would be charged from the day the cabinet approves the committee’s proposal.

This raises a number of issues. Licence fees will be refunded without any interest; that is just the kind of petty robbery the government indulges in. If a taxpayer delays in paying his tax, it charges him 24 per cent; if he pays in advance or if the revenue department unfairly takes away his money, the government pays no interest. Fairness does not figure in the government’s rule book. Next, the committee proposes giving all operators a little bit of spectrum, and charging them if they want any more. They have been in business for years and have crores of customers; it would be too disruptive to make them switch off the customers’ phones. Small operators may make do with the offered spectrum; the rest will have to buy more. For one thing, there is no reason to distinguish between small and big operators; small ones are not necessarily poor. For another, the government likes to charge lump sums; it thereby creates considerable uncertainty. It should abandon such arbitrary taxes, and change over entirely to a proportion of revenue. This principle is fundamental, and should be applied to all operators, not just new ones. The Supreme Court expects the government to come up with a solution for only those operators whose licences it cancelled. But justice should not be done selectively; if share of revenue is the correct way of taxing the industry, it should be applied across the board.

Finally, the Supreme Court has acted on the assumption that there is only so much spectrum available. But there is no shortage of spectrum. Much of the spectrum has been monopolized by the armed forces, which need only a fraction of it even in war. It is time the Supreme Court made them define their requirements more clearly and vacate the rest.