Bloomberg News

Top Indian Ministers Bid to Bury Differences Over Telecom Scam

September 29, 2011

Sept. 30 (Bloomberg) -- The two most senior ministers in the cabinet of Indian Prime Minister Manmohan Singh bid to end a controversy over events leading up to a sale of phone licenses that had engulfed an already fragile government.

Finance Minister Pranab Mukherjee, flanked by senior colleagues, said yesterday that a letter from his ministry that appeared to criticize his predecessor in the role, the now Home Minister Palaniappan Chidambaram, for failing to prevent alleged corruption surrounding the 2008 spectrum allotment didn’t reflect his views. Chidambaram declared the matter closed.

The letter and the ministers’ reaction to it had exposed a deep rivalry between two men considered possible future contenders for the post of prime minister, further undermining a government weakened by the allegations of graft and opposition attacks.

Street protests and hunger strikes by social activists have forced business leaders to acknowledge that a growing association with graft and paralysis in policymaking is harming investor confidence in Asia’s third-largest economy.

India’s chief auditor said the cut-price, first-come, first-served permit sale three years ago may have reduced government revenue by $31 billion. Former telecommunications minister Andimuthu Raja and company executives are on trial on charges they conspired to grant licenses to unqualified companies for personal benefit. All deny wrongdoing.

Court Plea

The tussle at the top of Singh’s council of ministers erupted after Subramanian Swamy, the president of a regional political party, filed a plea in the Supreme Court seeking an investigation into Chidambaram’s actions. The minister, Swamy said, took part in discussions on the pricing of airwaves and could have insisted on an auction that would have secured market rates.

To support his petition, Swamy submitted to the court the March letter from Mukherjee’s office that argued Chidambaram had missed an opportunity to ensure greater transparency and larger revenue by forcing an auction.

The top court yesterday adjourned hearings until Oct. 10.

The main opposition Bharatiya Janata Party said Mukherjee’s statement yesterday aimed to settle an “ego battle” between the two ministers and not ensure “public probity.”

“The statement of Pranab Mukherjee only makes the crisis deeper,” Ravi Shankar Prasad, a spokesman for the BJP, said. Chidambaram’s role in the phone permit sale “needs to be investigated.”

Amid BJP calls for Chidambaram’s resignation, Singh on Sept. 27 said a “restless opposition” would not succeed in its attempts to force early elections by undermining his government. The government’s second term expires in 2014.

A special court in New Delhi is hearing the charges brought by the Central Bureau of Investigation against Raja and government and company officials. The CBI put the potential loss to the government from the permit sale at a much lower $4.9 billion.

--With assistance from Abhijit Roy Chowdhury in New Delhi. Editors: Mark Williams, Sam Nagarajan

To contact the reporter on this story: Bibhudatta Pradhan in New Delhi at

To contact the editor responsible for this story: Hari Govind at

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