India: Tainted 2G spectrum auction begins today

Former telecom minister A. Raja arrives at Parliament in New Delhi on May 16, 2012. A day after he walked out of Tihar Jail after securing bail in the 2G spectrum scam, A Raja went to Parliament. The former telecom minister was in jail for over 15 months after being arrested in February last year for his role in the 2G scam.

India's reboot auction of 2G telecom spectrum licenses begins today, in an effort to undo some of the damage from the scandal that started an ongoing anti-corruption drive that has hammered Prime Minister Manmohan Singh's Congress Party and raise some $7.5 billion to shore up the budget deficit.

The government will auction the 2G spectrum freed from cancellation of 122 telecom licences by the Supreme Court in February starting 9 am on Monday, India Today reports.

A total of 11 blocks of airwave frequencies in each telecom circle, barring Delhi and Mumbai, where there are only eight blocks, will be up for bidding, the magazine said. At the end of the auction, telecom companies will have the option to pay full amount of 33 percent of final price by December 25.

The final price will then determine the amount that government will get from a one-time levy on spectrum held by existing operators beyond 4.4 MHz.

As GlobalPost reported (many times), the so-called "2G telecom spectrum scam" started a massive backlash against Singh's United Progressive Alliance (UPA) government in 2011, when the Comptroller and Auditor General (CAG) alleged that then-Telecom Minister A. Raja had cost the treasury as much as $33 billion by allotting licenses on a first-come, first-served basis instead of through a transparent auction.

In a case that has gone through several iterations since then, Raja has been accused of receiving kickbacks through a Byzantine web of shell companies and middlemen in exchange for doling out spectrum to favored companies.

Anti-corruption crusaders Anna Hazare and Arvind Kejriwal and rival politician Subramanian Swamy have blamed Singh for turning a blind eye to the alleged kickback scheme in order to avoid a rift with Raja's DMK--an ally that the UPA needed for survival.

Since then, the anti-corruption drive has moved on to several more alleged scams, including a similar decision not to auction coal mining blocks to the highest bidder, and many comparatively minor accusations leveled at individuals ranging from Sonia Gandhi's son-in-law to the president of the opposition Bharatiya Janata Party (BJP).

By revoking the licenses and holding a new auction, India is essentially punishing alleged wrongdoing before it has been proven in court. And the flip-flop will no doubt raise concerns among potential foreign investors about future political risk.

What is most troubling for India's future, however, is that none of these cases has progressed to fruition, so the perception remains that public officials and their cronies can loot the country with impunity -- even if they do have to spend a few years trotting back and forth to the court room in the meantime.