by November 5, 2017 0 comments

It’s time, we must stop plundering of natural resources

In India auction in allotment of natural resources streamlined after the land mark Judgment given by Supreme Court Judges GS Singhvi and AK Ganguly in 2G Spectrum scam and subsequent Presidential Reference given by the then Chief Justice of India SK Kapadia in 2012. It was the outcome of the public interest litigations filed by BJP leader Subramanain Swamy and noted lawyer Prashant Bhushan.

Though in 2001, telecom spectrum was auctioned; subsequent allotments were done through arbitrary ways leading to the 2G Scam and huge anti-corruption wave in the country and ended up the process of streaming the auction of natural resources like spectrum and coal by the intervention of Supreme Court and expose by Comptroller and Auditor General (CAG) of India. In 2003 Government reiterated that auction should be conducted in future. But till 2G Scam was blown out of proportion people in Government and corporate and lobbyists preferred arbitrary allotments in crooked ways. The auction became mandatory from 2010 with the auction of 3G and BWA spectrum (somehow called as 4G). From 2010 to 2016, the country’s exchequer earned more than Rs.3.6 lakh crores.

Meanwhile in 2012, people in Government and corporate collapsed the 2012 auction directed by Supreme Court. The auction ended on the very first day due to the non-cooperation of bidders. There were many reasons for this collapse. First – People in Government wanted to teach Supreme Court a lesson which cancelled all 122 2G licenses and started monitoring 2G Scam probe. Second All the Corporates don’t want to increase the price of the spectrum and would to control the price of next mandatory auction in 2014.

So auction in ended on the very first day. Look at the money got from the failed auction. Just 19 licenses were sold for Rs.9400 crore. Compare this figure with Raja’s 2G scam where 122 license were allotted to in fraud way and got only Rs.9200 crore.

Similar was the money arrived in the exchequer through auction of coal mines after the Supreme Court and CAG interventions. Sadly across the World, people in Government and Corporates unite in getting natural resources like Spectrum, Coal, Water etc. There are many ways be found out to curb the spirit of auction. Look at the 2010 auction of 3G airwaves. There was a cartelisation by certain corporates to curb the prices. Tata, Aircel, Idea all were involved. We have seen the controversies in the BWA (so called 4G) auction and back door entry of Mukesh Ambani.

There is no doubt that same kind of cartelisation happened in auction of coal mines too. There was a mutual understanding between corporates in 2016 spectrum auction for not bidding for 700 MHz spectrum. The fact of the matter is this kind of No: 2 games hap- pen only with the blessing or approval of people in Government.

These kinds of practises can be curbed only through more transparent and scientific ways in auction, which is now adopted in many western countries. Now it is time for the Country to look for new transparent ways to curb the ‘Jugad” or tricks in the auctions to curb the pricing.

In USA, Spectrum auction is through a very better way known as Dynamic Spectrum Arbitrage. There are many scholarly articles available in internet about Dynamic Spectrum Arbitrate which provides huge revenue to the exchequer. This kind of model in many similar ways is used in many democratic countries which encourages Public Private Partnership (PPP) Model like India. In India, sadly or unfortunately, PPP Model at last turned out to be a, area for playing tricks by Private Partner and Government is supposed to be the sole burden taker. Classic example on this regard is the scooting of private partner (Anil Ambani Group) from the Delhi Airport express Metro.

In Dynamic Arbitrage Model practised in Western countries, the natural resources always belong to the Government and private partner is only a distributor of the services generated from the natural resources. But in India, Government always shy away from the custodian responsibility. But let us hope, our country would also come out with such progressive and transparent mechanism in conducting auctions to get maximum revenue.

 BY J Gopikrishnan

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