Opinion The rollover raj

The angst of the Norwegians at the scrapping of 2G auctions is understandable. We Indians are quite alarmed ourselves by the vertiginous policy instability that our government is displaying. Almost anything can be rolled back,cancelled or reconsidered. Someone just has to point an accusing finger at the government,shout,“Bang!” and they’ll come quietly with their hands in the air. Last week,two cabinet ministers apologised unconditionally for including,in a school text,a classic work by the father of Indian cartooning.

Perhaps it is the insipid air of this rollback Raj — or rollover Raj? — that urged the Norwegian government to try its luck with a statement which is partly an appeal to ethics and partly a simple threat. But it doesn’t hold water. The argument suggests that the sovereign right of Norway has been impugned because its people hold a majority stake in Telenor,via the state. The Supreme Court scrapped 22 licences held by Uninor,a joint venture between Telenor and Unitech Wireless. In Telenor’s view,the floor price of fresh auctions is set too high. While it is not exiting India,the company has set the book value of its Indian holdings at zero. If it is not compensated or otherwise accommodated,the Norwegian people will lose the $3 billion investment it had made. Thus,the sovereign right of Norway to secure the welfare of its people has been impugned. That’s how the argument seems to run.

It would have been a reasonable plea but for a proximate,pre-existing and countervailing argument to sovereignty. The 2G licences were scrapped because the corruption and rigging that had attended the auction undermined the sovereignty of the Indian state and citizens.

Telenor was in India to benefit the Norwegian people by securing profits. Uninor was its most valuable property globally,delivering 84 per cent growth in the last quarter,because India is hosting a never-ending telecom boom while the market in Telenor’s home continent is saturated and sluggish,thanks to the recession and resulting political uncertainties in the European Union. These gains have now been lost.

On the other hand,India auctioned spectrum to raise revenues and deliver best value to consumers by widening the field and increasing competition. The government lost potential revenues due to alleged fixing and the consumer may not have got the best mix of providers. This is not a criticism of Telenor in particular,since Uninor was noted for innovative marketing strategies featuring cheap talktime. In Pakistan,its wholly owned operation is the fastest growing in the country thanks to similar strategies. Perhaps they were providing good value in India but without fresh auctions,it would be impossible to ascertain if the best possible mix of providers had been chosen. Both for the state and the citizen,the sovereignty to make advantageous choices had been undermined. And within India,concern for Indian sovereignty must trump an argument for Norwegian sovereignty.

Norway may have used this argument to increase pressure on the government,but the only real issue is,can a foreign investor seek reparation or advantage from the government purely on financial grounds in the event of policy change or policy hiatus? Logically,yes,since the government is party to foreign-backed ventures,in the sense that it negotiates,develops or lays down the rubric within which they are to operate,and guarantees services and protection. If the rubric changes,you could argue that its maintainer must pay for it.

What Telenor has suffered in the course of the 2G scam,or the uncertainty faced by Subhash Ghai’s Whistling Woods International Institute,which must vacate the land it operates from,stems from intervention by the courts in cases of impropriety. Here,the government is devalued and appears to be reduced to the status of just another party,vulnerable to legal attack for reparation. If policy uncertainties become routine,injured parties may feel inclined to rise to the bait.

express@expressindia.com