File No.

3/11/2003-INFRA

SECRET/CONFIDENTIAL

NOTE FOR FINANCE MINISTER

Subject:

Comments issued by Department of Economic Affairs (DEA) on Drafts Note for CCEA, of Department of Telecommunications (DoT) on Financial approval of Rs. 1,077.16 Cr for laying of alternate communication network for Indian Air Force for release of Spectrum.

Finance Minister had directed the undersigned to submit a Note explaining the circumstances under which the Office Memorandum dated April 08, 2008 has been issued by DEA on the above subject. The chronological sequence of events is recounted as under: -

Date January 29, 2008

Event Draft Note received from DoT on the subject mentioned above in Department of Expenditure: The limited issue is release of Rs. 1,078 Crore for laying of alternate Communication network for IAF, as additional budgetary support within 2007-08. The note is transferred to Department of Economic Affairs (DEA) since spectrum related issues are involved exact date of transfer not available on DEA files.

March 01, The Note is flagged as Urgent pending matter to be 2008 disposed off expeditiously before the undersigned after his joining as Director Infrastructure Division of DEA.

March 2008

7, Comments submitted for consideration on the Draft Note on File No. 3/11/2003-INFRA.

March 11, Finance Minister approves suggestion of Finance 2008 Secretary to use the Note for CCEA as an opportunity to raise basic issues of pricing of spectrum for the entire range of spectrum under commercial use (photocopy of Notes at Annexure I/ p3) March 12, Finance Secretary places in file a Note prepared 2008 in DEA on telecom fees and charges for spectrum pricing to be used for formulating comments on the issues involved (Photocopy of Notes Annexure II, pp 4-11) March 2008 31 The Notes placed in file by Finance Secretary, as also various recommendations of TRAI in this regard used to prepare comments and a Draft OM placed on file for approval of higher authorities (Photocopy of proposed comments at Annexure III, pp 12-15) April 2008 April 2008 03, AS (FA) modifies the Draft OM submitted. Modified version of the OM at Annexure IV, pp 16-19. 07, The matter is discussed further with Finance Minister by Finance Secretary on the basis of a Note prepared by him. (Photocopy at Annexure V, pp 20-21), Vide his marginal notings, FM agrees to the following: 1. Scarcity factor must be taken into account in fixing spectrum usage charges 2. On pricing of spectrum, decision now, details later.

April 2008

7, Finance Secretary approves a Draft OM for issuance based on discussions with FM, duly recorded on file (photocopy file notings in this regard at Annexure VI p 22; OM approved for issuance at Annexure-VII, pp 23-25)

April 2007

8, The earlier Draft OM, which was saved on the undersigneds computer is inadvertently printed and signed by mistake. Hence, OM at Anenxure III is issued instead of the one actually supposed to have been issued at Annexure-VII.

April 2008

09, The error in issuing the wrong OM is detected after media reports attribute certain stipulations on spectrum pricing to Ministry of Finance, which, however, are not there in the final approved OM. Accordingly, the undersigned delivers the correct OM personally to Wireless Advisor, DoT whose reception on behalf of Secretary, DoT may be seen on Annexure VII at the bottom. As informed by Advisor (Wireless) the incorrect version of OM received was not processed in the DoT file. JS (Infra), DEA speaks personally to Secretary, DoT asking for withdrawal of the earlier OM and the request is acceded to by Secretary, DoT.

2.0

The OM finally issued is based on the discussions held by

FS with FM, the gist of which is recorded and placed at Annexure V.

3.0

In as far as the issuance of the wrong OM, in the first

instance is concerned, the mistake, though inadvertent, is purely assignable to a lapse on the part of the undersigned. For this lapse, the undersigned is agreeable to bear the consequences of any action - disciplinary or otherwise which the Department may

contemplate against him.

4.0

This Note, which has been seen by JS (Infra) and AS (EA),

is being submitted as per FMs directions through HCI, London; Finance Secretary is on tour.

Sd/(GOVIND MOHAN) Director April 10, 2008

Finance Minister (Camp: London) Through: Minister, Economic, HCI, London (Total: 25 pages)

I accept that the lapse in sending the wrong OM was inadvertent. However, drafting or issuing OMs on draft Note for Cabinet/CCEA etc. should be done with greater care. For Instance, the wrong OM dated 8.4.2008 is captioned Ministry of Finance, Department of Expenditure. The modified draft OM at annexure-IV is also captioned, Ministry of Finance, Department of Expenditure and is addressed to Ministry of Power (Sh. S. Behuria, Secretary), Sanchar Bhawan, New Delhi. The final OM, which is the correct version, sent on 8.4.2008 (Annexure-VII) is also captioned Ministry of Finance, Department of Expenditure.

2.

These errors could have been easily avoided.

3.

That apart, the draft note received from DoT was indeed

considered by me on 11.03.2008. Thereafter, that file containing the draft note from DoT and the proposed OM was not put up to me. What was considered was only a non-paper given to me by the Minister of Telecommunications on which I had been informed

by FS that DEA would send a non-paper containing our views. It is in this context that the note for discussion was prepared; a discussion took place; and I had indicated my views on the margin of that note. Logically, this should have been followed by sending a non-paper to the DoT. However, if there was an intention to send a formal OM containing our views on the draft note for cabinet received from DoT, that file should have been put up to me and my signature obtained. I may note that I was in office on 8.4.2008 and 9.4.2008.

4.

Such errors should be avoided in future.

Sd/(P. Chidambaram) Finance Minister 16.04.2008 (D. Subbarao)

Sd/Finance Secretary 16.04.2008