Asia Times: India's telecom bailout becomes election issue



	August 03, 1999	atimes.com

India/Pakistan

India's telecom bailout becomes election issue
By Ranjit Dev Raj

NEW DELHI - A billion-dollar bailout of transnational telecom companies may cost Prime Minister Atal Bihari Vajpayee's Bharatiya Janata Party dear in India's forthcoming general elections.

Opposition parties are accusing the powerful Prime Minister's Office of receiving payoffs for bulldozing through a New Telecom Policy which releases the transnationals from massive license fee arrears and contractual obligations.

The opposition is not having to try too hard to make the charges stick because of a leak of secret official documents showing resistance by a former telecom minister, the finance minister and the attorney general.

Earlier in the month, ex-telecom minister Jagmohan, who was eased out of office in June just before the new policy was made operational, was summoned by President K. R. Narayanan, who demanded to be briefed.

This week, prodded by the opposition, the Election Commission asked to see the files to determine whether the new policy violates a model code of conduct which discourages governments from making major policy changes once elections are declared.

The commission has already shot down attempts by the caretaker government to introduce, through an ordinance, direct-to-home television broadcasting promoted by media baron Rupert Murdoch.

Describing the move as a ''major policy decision in the broadcasting sector,'' the three-man commission ruled that the direct-to-home issue, contested for years by existing cable-television operators, must await a new parliament.

The New Telecom Policy allowing a switch from a fixed license fee regime to a revenue sharing system, announced through an ordinance a month ago, stands on shakier grounds and is unlikely to meet with the approval of the commission.

Additionally, the policy has been challenged in the Delhi High Court by the Delhi Science Forum, whose lawyer argued Friday that the telecom operators were making huge profits from the policy and had even floated public issues at premium.

After removing Jagmohan, the Prime Minister's Office proceeded to make crucial changes in the telecom policy after ignoring clear warnings by the Communications and Finance Ministries, according to official documents leaked to opposition parties.

Said Nilotpal Basu, deputy in the Rajya Sabha (upper house of parliament): ''How can the government talk of revenue sharing when it is yet to define what revenue constitutes?''

Basu, a qualified telecom engineer and a member of the Communist Party of India - Marxist (CPI-M), said that as things stood the transnational companies could juggle services and sale of hardware in such a manner as to dodge having to share revenue with the government.

Worst of all, Basu said, the government had not only bailed out the companies but had also changed the whole telecom policy laid down when the sector was first liberalized in 1994, resulting in a loss of $12.5 billion of potential revenue over the next 15 years.

''All this cannot have come about without substantial payoffs at the highest levels,'' said Basu, who is at the forefront of the campaign against the policy by the Communist Left Front and the Congress party.

So far, the government has refuted the charges. Sushma Swaraj, a former communications minister and BJP spokesperson, claimed that the policy could not have been delayed because it would have ''led to the collapse of the telecom industry.'' The government also claimed that such an event would have exposed banking institutions, from which the transnationals had borrowed, to losses amounting to $25 billion.

But the government has trouble from another quarter, the Telecom Regulatory Authority of India (TRAI) which, finding itself completely sidelined, has filed a petition in the Delhi High Court demanding a definition of its authority.

Basu, however, thinks that the legal tussle between the TRAI and the government will only result in further delays which could work to the advantage of the transnationals, giving them another excuse not to pay their license fee arrears.

In fact, Attorney General Soli Sorabjee had advised the government in January this year that the government should not be seen to be allowing the transnationals to be ''breaking license conditions and remain in arrears for large amounts and then plead for major favorable changes.''

Finance Ministry documents show that it favored a one-time charge from the transnationals for forgoing revenues and opined that existing arrears could not be treated as an entry fee to the new regime, as has been done. According to Basu, the Finance Ministry's dissent resulted in the sudden transfer last month of Revenue Secretary Javed Chowdhry, in another heavy-handed move by the government.

Jagmohan had himself seen to the termination of the licenses of three defaulting companies and said it was ''legally, constitutionally, financially, commercially and morally'' untenable for companies not to meet contractual obligations.

''How would the people, parliament, press and the courts put up with non-recovery of public dues, and if the companies were in fact running up losses why were they not surrendering their licenses?'' he has demanded to know.

(Inter Press Service)

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