The finance ministry had to be extra proactive in 2008 to ensure that the 3G spectrum didn’t go cheaply like 2G licences. After being a helpless spectator to former telecom minister A. Raja selling 2G spectrum cheaply to his favourite firms, finance ministry swung into action in August 2008 to see that same thing doesn’t repeat with 3G spectrum. It was left to then finance secretary and now RBI governor D. Subbarao to ensure that A. Raja doesn’t have his way.
In a strong letter Mr Subbarao told then telecom secretary Siddharth Behura not to finalise 3G guidelines as it has not been consulted on clauses with financial implications. “The issue of guidelines without any consultation with ministry of finance either within the forum of telecom commission or out side is in appropriate and contrary to the cabinet decision,” Mr Subbarao had said in the letter.
Soon after receiving the letter Mr Raja again launched his propaganda that the finance ministry was kept in loop before taking decisions on the 3G. The former minister claimed that decisions where cleared by the telecom commission, in presence of the member finance which was the representative of the finance ministry. However, this time the finance ministry was in no mood to give up.
The finance ministry informed the telecom ministry about a Cabinet decision in October 2003 that spectrum pricing would need to be decided mutually between telecom department and finance ministry so as to provide incentive for efficient use of spectrum as well as disincentive for sub-optimal usage. The major difference between the two ministries was what should be the base price from which the auction should start. The telecom ministry was suggesting a price of `2,020 crores but the finance ministry wanted double that price. Due to this difference the telecom ministry was forced to delay the date of 3G auction three times. Both the telecom and finance minister met the PM Manmohan Singh over the issue.
On 13 July 2009, with UPA back in power and Pranab Mukherjee as the finance minister a new Group of Ministers (GoM). It must be remembered that during 2G, Mr Raja had claimed to the Prime Minister that he had got the support of Mr Mukherjee (who was then external affairs minister) to go ahead with issuing 2G licences.