The Great Looting of the Indian Telecom Sector

The liberalisation-privatisation-globalisation policies initiated in 1991 resulted in unimaginable looting of the Government treasury, the economy, the natural resources  and draining of resources from India to foreign countries. Telecom Sector is one of the sectors where this looting is taking place in astronomical amounts.

Following are the main incidents of this great looting in the telecom sector;

a)      Telecom Scam 1999

The NDA Government lead by the BJP introduced New Telecom Policy 1999 allowing the private telecom companies to migrate from the payment of fixed license fees(payment of the license fee as a onetime lump sum amount)  to  annual payment as a share in the revenue. As per the reply given by the Minister of State For Communications to an unstarred question in the Loksabha on 23-11-2011, due to this migration policy, the Government lost an amount of Rs 43523.92 crores and the details are as below:

CMTS Licenses

i)        Fixed license fee to be paid by the CMTS(Cellular Mobile Telephone Services) Licensees for 10 year license period=Rs 30492.12 crores

ii)       License fees actually paid by these companies for the ten year license period on the basis of migration to revenue sharing=Rs 11234.90 crores

iii)     Loss to the Government exchequer=Rs 19257.22 crores

Fixed telephone Licenses

i)        Fixed license fee to be paid by the Fixed Telephone Services  Licensees for 15 year license period=Rs 27862.50 crores

ii)       License fees actually paid by these companies for the 15 year license period on the basis of migration to revenue sharing=Rs 3595.80  crores

iii)     Loss to the Government exchequer=Rs 24266.70 crores.

Total Loss=Rs 19257.22+24266.70=Rs 43523.92 crores. This is the looting done by the Private Telecom Operators with the co-operation of the BJP lead NDA Government. Yet, the leader of the BJP Sri L.K.Advani held a rath yatra recently against corruption!  

b)      2G Scam

Under the UPA Government lead by the Congress, the 2G spectrum scam took place and the scaam is in allotting 2G spectrum at dead cheap rate to certain favored telecom companies in 2008 and as per the estimate of the CAG(Comptroller and Auditor-General), the Government lost an astronomical amount of Rs 1,76,000 crores in this scam and to this extent the private telecom operators have benefitted illegally.

c)       3G Scam

Airtel paid to the Government for 3G spectrum for 13 circles, but providing 3G services in 20 circles. Vodafone paid for 11 Circles, but providing services in 20 circles. Idea paid for 9 Circles, but providing seerrvices in 19 circles. All these 3 companies signed “intra-circle roaming agreements” among themselves as per which the company among them which is not having the 3G spectrum in the concerned circle will provide the 3G services by sharing the 3G spectrum of the company having it in that Circle. As per the license condition, 3G services have to be provided by a company in the circles where it purchased 3G spectrum from the Government and no sharing of the 3G spectrum is allowed. It is estimated that these 3 Companies together were benefitted to the extent of Rs 20,000 crores (the value of the 3G spectrum for the circles where they are providing 3G services without purchasing 3G spectrum). This scam thus resulted in a loss of Rs 20,000 crores to the Government. DoT, after a lot of hesitation, finally issued notice to these 3 operrators to terminate their intra-circle 3G roaming agreements within 24 hours and stop providing the 3G services in the circles where they are not having 3G spectrum. But these 3 operators have decided to “fight” against this.

d)      Draining of resources to foreign countries

The private telecom operators have procured the equipment required for the expansion of their networks from the foreign telecom equipment manufacturing companies and as a result domestic telecom equipment manufacturing industries like ITI etc became sick and domestic research and development in telecom sector came to a virtual halt. As per the TRAI’s estimation, during the five year period 2004-05 to 2008-09, the cost of the telecom equipment utilized for the expansion of telecom network was Rs 309369 crores. Out of this, the value accrued to India was only Rs 34031 crores(11%) and the remaining Rs 2,75,338 was paid to foreign telecom equipment companies and went to foreign countries.

Further, as per the reply given by the Minister of State For Communications Sri Milind Deora in Loksabha on 7-12-2011, during the years 2009-10 and 2010-11, the cost of the equipment imported was Rs 95172 crores and equipment produced indigenously was Rs 1,04,275 crores. But in this indigenously produced equipment what was the value added in India was not mentioned. Even though the equipment is produced in India, it is largely nothing but assembling of imported parts. Only 10 to 20% of the value is added by such assembling and the remaining 80 to 90% of the value is for importing the spare parts. Therefore, at the best, out of this Rs 1,04,275 crores  value of the equipment indigenously produced, the value created at the best in India will be to the extent of 20% and the remaining 80% was for importing thee parts. Hence about another Rs 80000 crores was utilized for importing the parts for the assembling in the factories in india. Thus, approximately, in the two years 2009-10 and 2010-11, Rs 1,75,172 crores was utilized for importing the equipment(95172+80000)).

During the period 1997 to 2011 March the number of telecom subscribers increased from 1.75 crores to 85 crores. For the period 2005-05 to 2010-11, the cost of the equipment imported was Rs 2,75,338crores + 1,75,172 crores=Rs4,50,510 crores. If we assume that for the period 1997-98 to 2003-04, the cost of equipment imported was half of this Rs 4,50,510 crores i.e Rs 225255 crores, the total cost of the imported equipment during the period 1997-98 to 2010-11 would be Rs 6,75,765 crores. Such an astronomical amount was drained from our country to foreign country for procuring equipment. If the equipment of this much cost was produced in India entirely without importing parts, by developing our own research and development, how much the country would have benefitted? But the private companies do not care for this. Their aim is to loot the economy in collaboration with the foreign companies. 

How much was looted?

It cannot be said exactly. But from the above said cases, the estimated loot/draining out of resources was (a) 43523 crores   under BJP lead NDA regime due to the change in the policy allowing this loot  (b) 2G scam Rs 1,76,000 crores and  (c) 3G scam Rs 20000 crores under UPA regime and a drainage of money to the extent of Rs 6,75,765 crores for importing equipment during NDA/UPA regimes. Thus the total amount was Rs 915288 crores. To this, the amount looted by the scams during 1993 to 1996 under the Congress Government with Sukhram as its Communications Minister has to be added. Also the selling of VSNL at dead cheap rate by the NDA Government to Tatas has to be added. 

This proves that the story told by the BJP/Congress lead Governments that the foreign direct investment is necessary since we are not having the capital required for development is a false story intended for supporting the joint looting of the Indian economy by the Indian and foreign big capitalists. Actually these policies are resulting in draining out of our resources to foreign countries instead of helping in our development.

It is thus an established fact that the big corporate and the liberalization-privatization -globalization policies are the root cause of the mega scams and mega corruption. But why Anna Hazare and his team are not exposing this mega corruption due to the   big corporate and liberalization policies and why they are confining their anti-corruption movement to attack mainly the government employees and officers? Why their attack is not concentrated on the big corporate-ruling politician-bureaucrat nexus which is the root cause of corruption?

               If we have to save telecom sector and if we have to save the Indian economy, we have to defeat the liberalization-privatization-globalization policies and compel the Government to adopt alternative policies oriented towards strengthening self reliance and people oriented development. There is no other alternative.

----P.Asokababu