Q&A: Montek Singh Ahluwalia, Deputy Chairman, Planning Commission

Q&A: Montek Singh Ahluwalia, Deputy Chairman, Planning Commission

'It's not PM's job to get involved in every little disagreement'

Karan Thapar / New Delhi August 8, 2011, 0:18 IST

Karan Thapar: Hello and welcome to Devil’s Advocate. With the Opposition training its guns on the Prime Minister, we ask what exactly did he know about the 2G scam and when. That’s the key issue I shall explore today with the Deputy Chairman of the Planning Commission Montek Singh Ahluwalia.

Mr Ahluwalia, let me start with a general question before I come to specifics. Whilst no one could accuse the Prime Minister of corruption, there is a growing feeling that perhaps his response to and handling of 2G was less than vigilant. Would you accept that?

 

Montek Singh Ahluwalia: No, not at all. I think those who say that have a mistaken notion of how cabinet government works. Prime Minister is not micro managing every decision before it’s taken. So whilst I think 2G clearly became a problem I don’t think it became a problem because it was mishandled at the PMO level before all these decisions were taken.

Karan Thapar: Before I come to specifics, you are saying to me that this widespread impression that the Prime Minister was less than vigilant is unfair and wrong? Both?

Montek Singh Ahluwalia: That’s correct.

Karan Thapar: Alright. Let’s then come, one by one, to the five instances where questions are asked about the Prime Minister’s actions. To begin with, in 2006 why did he allow Dayanidhi Maran to persuade him not to make pricing part of the G0M that he had specifically set up for 2G. Many people believe that’s when the problem began. 

Montek Singh Ahluwalia: I think this has been discussed on a number of occasions. The GoM had much broader objectives. You know the specific issue of pricing was already covered by a Cabinet decision in 2003. I mean, the 2003 Cabinet decision specifically said that the pricing issue will be resolved by the Finance Minister and the Telecom Minister. Now you cannot set up a GoM to look at something which has been decided at a Cabinet level. I think if anybody felt that the previous Cabinet decision needed to be reversed, they should have taken the matter to Cabinet. What I think Mr Maran said was this was not relevant in this case, there are systems that exist and therefore it was taken out.

Karan Thapar: So, in the circumstances that prevailed in 2006, you are saying a GoM would have been redundant to handle the pricing issue.

Montek Singh Ahluwalia: No, no there were other issues that the GoM had to deal with...

Karan Thapar: But not pricing...

Montek Singh Ahluwalia: Yes, because there was already a mechanism in place. 

Karan Thapar: And that mechanism had already sorted out how the matter would be handled.

Montek Singh Ahluwalia: Well I know that it had indicated how it would be handled. Of course it hadn’t sorted out what would be done, that decision came much later. 

Karan Thapar: Now the second instance where questions arise about the Prime Minister’s actions comes in 2007, when the Law Minister and the Telecom Minister had differences over how the spectrum should be allocated. Why did the Prime Minister allow the Telecom Minister to dismiss the Law Minister’s advice that this issue should go to a GoM?

Montek Singh Ahluwalia: I understand the Law Minister did raise this issue but actually what had been referred to the Law Minister was a much narrower technical issue. So whether to go to a GoM or not is not automatic when two ministeries disagree on an issue that doesn’t concern the second Ministry. I think that Mr Raja’s view at that time was that the issue that had been raised by the Law Minister pertained to issues that were squarely within the realm of DoT going through the normal processes of the telecom commission etc. And he was not bound to go to the Cabinet because the Law Minister asked him to because it’s not an issue on which the Law Minister was concerned.

Karan Thapar: So you are also saying to me that the argument that this was a breach of what’s called the transaction of business rules of Cabinet, where when two ministers disagree, the matter must go to Cabinet for a solution, you’re saying that interpretation is wrong, it doesn’t apply.

Montek Singh Ahluwalia: Well, I am not an expert, but let me tell you my understanding. When two ministers disagree on issues that concern them it is certainly true that goes to the Cabinet. But when a minister is disagreeing with the ministry concerned on an issue that doesn’t concern the ministry which is disagreeing, then it doesn’t actually go to the Cabinet.

Karan Thapar: Alright. A third area where questions are raised about the Prime Minister’s behaviour again pertains to 2007. Was he unaware of, or did he ignore the fact, that both the Finance Minister and the Finance Secretary were pressing for auction rather than first-come-first-serve? And in addition, the Finance Secretary, in writing, had raised serious questions about selling spectrum in 2007 at 2001 prices and had said that any decision to that effect should be stayed. 

Montek Singh Ahluwalia: Well, let me say this has been so much discussed. I don’t know for example how much the PM knew when the discussion was going on. But what was brought to the PM’s notice, on the basis of the material that has been revealed in the public regarding the auctioning decision, is that the TRAI, after having gone through these things, had come to the conclusion that auction is not the right route to follow for these 900 Mhz and few other areas of the spectrum but it should be followed for 3G. So the Ministry took a view based on the TRAI recommendations. I think the issue of pricing was always meant to be handled separately between the Finance Ministry and the Communications Ministry.

Karan Thapar: But in a letter written by the Finance Secretary dated November 2, 2007 he specifically raised this questions about selling spectrum in 2007 at 2001 prices and the Finance Secretary actually said this decision should be stayed. Was the PM not aware of that?

Montek Singh Ahluwalia: Again this illustrates the fact that the mechanism was working and the two ministries were discussing with each other. I have no idea (of your specific question). There is no reason by the way why the Prime Minister should be aware of letters written by Finance Secretary to his colleague in Communications. But what that letter does seem to suggest, is that having accepted the issue, that auctioning is not going to be done-- You know I want to clarify by the way, we can always revisit in retrospect, whether that was right recommendation of TRAI, whether the government should have accepted, but that was at the policy level-- Having accepted that, what he was raising was, what should the prices be? Should it be at 2001 price? These discussions went on between the Finance Ministry and the Communications Ministry for the next several months.

Karan Thapar: Is this not an area where the PM should have been more alert or should have been intervening?

Montek Singh Ahluwalia: Not at all. I mean, look if the PM would have gotten involved in every little disagreement there, I mean he would have no time whatsoever to do his own job.

Karan Thapar: Alright a fourth area, where questions are raised about the Prime Minister’s behaviour is when the Prime Minister on November 2, 2007 wrote to Mr Raja, drawing his attention to a number of issues, he asked Mr Raja to exercise fairness and transparency. But he didn’t thereafter follow up to monitor and check that his advice has been heeded. Shouldn’t he have made the extra effort to check that his advice was being followed?

Montek Singh Ahluwalia: Well, let me say that again this is in the public domain. He raised the issue because the issue had been raised in public and brought it to the Minister’s notice. The Minister subsequently responded and assured him that he was following the established policy and there was some departure which I think he brought to the attention of the PM and said that these had the support and approval of the Solicitor General. Now in an environment like that, remember, if something wrong or unfair is being done by a Ministry, people affected take the matter to court, they protest. I don’t think that the Prime Minister should be behaving as the Super Minister, supervising everything that his colleague does. He raises the issue, he got an assurance from the Ministry that they were following established policy and that it had been approved by the Solicitor General.

Karan Thapar: But wasn’t there a need to monitor and just check that his advice to be cautious, to be transparent, to be fair was being actually implemented? That extra monitoring, did not happen?

Montek Singh Ahluwalia: But that is not, in my view, how a Cabinet government works.

Karan Thapar: Why?

Montek Singh Ahluwalia: I mean, the fact of the matter is there are multiple double checks going on and aggrieved parties take ministries to court. I mean had something gone wrong, it would have surfaced. I think he brought it to the notice of the Minister and the important thing is that the Ministry responds saying yes we are following up on an established policy. I think when a Ministry responds like that, if the Prime Minister keeps monitoring, then we are not running a Cabinet government. We are running something like a micro-managed form of government.

Karan Thapar: In other words, the Prime Minister’s not a Headmaster or a school teacher who has to keep checking on homework?

Montek Singh Ahluwalia: I think that’s absolutely correct. 

Karan Thapar: Fifth. And perhaps in a sense this is the most important of all. When in December 26, 2007, Mr Raja wrote to the Prime Minister to say that he intended to implement first-come-first-serve not in terms of the date of application, which was the agreed conventional way of implementing it, but in terms of a new criteria, which it seems A Raja had devised ie in compliance with the letter of intent, it was quite clear that Mr Raja was already indicating that he was fiddling or changing the rules. And the Prime Minister didn’t object. Was it because the Prime Minister didn’t spot what Mr Raja was doing, or he didn’t care?

Montek Singh Ahluwalia: Well, let me say that that’s the letter I was referring to. When the letter comes and Mr Raja gave a reason why he had to depart from the traditional rule, because in the past applications were treated one after the other whereas here number of applications had piled up and therefore if everybody was going to get a letter of intent on the same day, how did you determine seniority? Now whether the procedures were fair, whether the people got enough time, there have been lot of issues raised and they are all subjudice. I don’t want to comment on those. But the important thing is what the Prime Minister got was an assurance that policy is being followed, except in a certain area some change is necessitated and this has the approval of the Solicitor General. I am aware that there is an issue of whether there were changes made after the Solicitor General’s comments. I don’t know. But that’s all something that will come out…

Karan Thapar: But as you said, here the changes were necessitated because there were a whole lot of applications that had to be processed at one go and not as was the case previously... 

Montek Singh Ahluwalia: Yes.

Karan Thapar: With applications coming one after another. As a result of this Mr Raja or the Prime Minister rather thought it was ok for Mr Raja to change from date of application to compliance with letter of intent. He saw no problem with that.

Montek Singh Ahluwalia: Well, I don’t know what went on in the PMO but what the PM would have been told is that he’s saying he is following the policy except where some change is necessary and this has the approval of the Solicitor General. I think when you are faced with that to micro-manage the decision is going a little too far.

Karan Thapar: Finally, there is a note on the Prime Minister’s file dated January 22, 2008, put there by Prime Minister’s private secretary, which says that the Prime Minister would like the PMO to be kept at arm’s length. In the light of the five points that I have been through, meticulously one-by-one, many people believe this desire to be kept at arm’s length is either proof that the Prime Minister was washing his hands off the whole 2G affair or, worse, he was actually looking the other way.

Montek Singh Ahluwalia: Well, it is true that this item of news has been played up quite a bit but it is one of the most gross misrepresentations of the fact. The facts are actually extremely straightforward. That noting was recorded-- I have seen the papers-- that noting was recorded on an internal proposal which had come up from the PMO, suggesting a particular way of handling the problem so that all the legacy issues are taken care of and maybe some sensible pricing is done. Now what the Prime Minister directed is that this should be shared informally with the DoT. I mean, remember the DoT is looking at this issue, the Finance Ministry and the DoT are talking about it, what the Prime Minister said was share it informally with the DoT. We should not be directly involved with it because you can’t have a direction coming from the Prime Minister. And the reference to at an arm’s length is simply to let us be at an arm’s length with regard to such a proposal. It does not say that something going on in the DoT, which may or may not be good, lets stay at arm’s length. That’s the interpretation that has been placed upon it but I find it wrong.

Karan Thapar: Ok. I have heard your explanation. But the Opposition, who also read the Prime Minister’s press release, turn around and say that the Prime Minister may not be at arm’s length but he wasn’t hands-on either. Worst still they say that in critical moments he either took his eyes off the ball or he deliberately shut his eyes to what was happening.

Montek Singh Ahluwalia: I think this whole business of hands on forgets that there are innumerable ministries making decisions. The idea that the Prime Minister must be watching over the shoulders of every ministry goes completely against any kind of principle of how Cabinet government should work. I think it is the job of the Prime Minister to give broad directions, to be reassured that the Ministers are doing the right thing and let me say on this specific issue of pricing, which is what that note refers to, I am sure they were aware that this was being discussed between the Finance Ministry and the DoT and it hadn’t yet been resolved.

Karan Thapar: You raised the critical issue of pricing. That is part of a series of concerns that the Opposition has. I want to take a break and come back and put to you the Opposition charge against the Prime Minister central to which is this issue of pricing. We will be back in a moment’s time. See you after the break.

Karan Thapar: Welcome back to Devil’s Advocate and an interview with the Deputy Chairman of the Planning Commission Montek Singh Ahluwalia. Mr Ahluwalia, let’s come to the case the Opposition makes against the Prime Minister. Arun Jaitely has gone on record to say that in each of the three important cases where Raja is in court, Mr Raja had either informed the Prime Minister and therefore he was fully in the loop or the Prime Minister had given Mr Raja advice which Raja had ignored and the Prime Minister had not monitored. And to begin with the key issue that Jaitley raises is to do with pricing. He says in the Prime Minister’s letter of November 2, 2007 to Raja, the Prime Minister had asked him to consider the “revision of the entry fee”, which is currently benchmarked on old spectrum auction figures. Raja didn’t do that and the Prime Minister either didn’t check or if he checked and found out he didn’t worry and this issue of pricing became a problem thereafter. Do you think the Prime Minister should have been more careful?

Montek Singh Ahluwalia: Well you know, as I have said before, the pricing issue was to be determined after discussions between the Ministry of Communications and the Ministry of Finance. And I recall those discussions went on for several months . You know the UAS license on which the entry fee is given doesn’t actually give you the spectrum. I mean, the spectrum is given subsequently based on the mobile wireless license when spectrum gets allocated. So the whole issue of pricing, potentially, was still open. And its not I think until July of 2008, that a final decision was taken, based on an agreed position presented to the Prime Minister by the two ministries.

Karan Thapar: Except, if a final position was taken in July 2008 and actually licenses were awarded in January 2008, then, infact, the final decision was taken six and a half, seven months after the decision happened. It’s a retrospective validation.

Montek Singh Ahluwalia: No, no. Pricing of spectrum can be changed independent of the entry license but there is an issue here. The issue really is, and this was the argument being made at the time, that the TRAI, which is afterall a regulatory body, had given a very clear recommendation after weighing all these things that we should continue for level playing field purposes with the system that we have. I think it is still possible to argue that pricing of spectrum should have been changed. That could have been done, even afterwards...

Karan Thapar: This is a fairly important point you are making. It is still possible to argue that the pricing of spectrum could have been changed. That in a sense is also the advice the PM was giving but that advice wasn’t acted on. Was that one area where the PM should have been more vigilant?

Montek Singh Ahluwalia: No, no let me say that, you know, the decision of the Cabinet of 2003 refers this matter to the two ministries. I think what the PM needed to do was to assure himself that the two ministries had reached an agreement. That agreement made some changes by the way in the issue...

Karan Thapar: So the July 4, 2008 agreement validates and excuses any lack of action by the PM?

Montek Singh Ahluwalia: By the PM certainly. I mean after all you have got the 2 main ministries coming with an agreement. But I want to add one more thing here. It is very important to recognise that that agreement actually also made the decision that 3G spectrum will be auctioned. You know take a look at the policy as a whole...

Karan Thapar: But 3G is a different matter... 

Montek Singh Ahluwalia: People are not recognizing that the 3G auction was a dream auction...

Karan Thapar: Let’s leave 3G out. But let’s stick to 2G. My final question. Even on this critical question of advancing the cut off date and changing it arbitrarily from October 1 to Sep