New Delhi: RBI Governor D Subbarao on Tuesday appeared before a Parliamentary panel and said he did not agree with the controversial Finance Ministry note which suggested that Finance Minister P Chidambaram could have insisted on auctioning the 2G spectrum.
He also rejected suggestions that allocation of radiowaves resulted in a loss.
Subbarao, who appeared before JPC on 2G scam as a former Finance Secretary, told the panel that he was in disagreement with the March 25, 2011 note of the Finance Ministry to the Prime Minister which suggested that Chidambaram could have insisted on auctioning the 2G spectrum instead of it being allowed to be allocated on first-come first-served basis.
Chidambaram said in a meeting with then Telecom Minister A Raja on January 30, 2008 that "he was for now not seeking to revisit the current regimes for entry fee or revenue share" of spectrum, the note said.
When asked about the issue of loss incurred by not auctioning the spectrum, Subbarao - who was Finance Secretary between April 30, 2007 and September 4, 2008- is learnt to have said that while there was no loss to the exchequer, even if there was, it was only notional in nature. He said there was no monetary loss in actual terms. "Much depends on perception," he is learnt to have told the JPC.
He is also understood to have said that there was no deliberate delay on his part in responding to a Department of Telecom letter of November 29, 2007 in which he was informed that the entry fee was finalised for the unified access regime in 2003 based on the decision of the Cabinet.
He said he had appraised the Finance Minister about the letter on January 9, 2008 - a day before the licences were allocated.
When some members, including those from the Left Parties and DMK, sought to know why he informed the Finance Minister a day before spectrum allocation, Subbarao is learnt to have said that Finance Ministry was not aware that licences would be granted on January 10. Some members questioned the delay of nearly 40 days in informing the Finance Minister.
The November 29, 2007 DoT letter to Subbarao was in response to his November 22, 2007 letter in which he had asked the Telecom department to justify how it was taking entry fee of only Rs 1,650 crore from operators in 2007 as the amount was fixed in 2001.
On the high rate of price rise, Rangarajan said the inflationary expectations would decline because of the improving rainfall.
"By mid of September we know that monsoon is not as bad. Therefore, I expect inflationary expectations to come down in the coming weeks and months," he said.
The wholesale prices-based inflation in August stood at 7.55 per cent, up from 6.87 per cent in July. Retail inflation, on the other hand, was up 10.03 per cent during the month, from 9.86 per cent in July.
However, Rangarajan said that with the recent diesel price hike could stoke inflation in the short-term. The government last week hiked diesel prices by Rs 5 a litre, which economists said could have a bearing of up to one per cent on inflation.
"What the RBI will look at, in my view, is the behaviour of inflation exclude the direct impact of the increase in diesel prices and see whether there is a momentum towards lower inflation. It is on that basis that monetary policy will be determined," he said.
Rangarajan also said the committee on sugar decontrol will submit their report in the next 7-10 days.
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