2G spectrum case verdict: How a political narrative killed the telecom industry

Bringing an industry to its knees

Amidst all this melodrama of allegation, counter-allegations and vindication, what everyone has forgotten is the death of Indian telecom sector that gave jobs to thousands of people.

On 2 February 2012 - just two years after the filing of First Information Report by the CBI in the alleged 2G spectrum scam, the Supreme Court had cancelled 122 telecom licences and spectrum allocated to eight companies. Most of the companies that lost their license due to SC judgment in 2012 shut shop in India.

The SC, in its judgment, pronounced that the process of allocating 2G spectrum was flawed (on-first-come-first basis). In this process, the court punished the companies for the supposed mistakes of politicians. Now with the decision of the trial court, one can argue that that even though the process of allocating 2G spectrum was flawed, it did not involve corruption.

When the SC judgement came in 2012, in the cacophony of corruption charges spearheaded by the opposition party against the government in power, everything looked black and white. The UPA government then had called the decision of the SC an instance of judicial overreach, that hampered the executive's ability to make policies for the country.

Of course, before the 2G judgment by the SC, there was no policy of auction of natural resources in the telecom sector. But since the SC called the process of allocation of 2G spectrum flawed, the Opposition was able to make people believe that a flawed allocation policy must have been a result of corruption.

Though, in reality, it is quite possible that a flawed process may be due to lack of imagination of a flawless process. A logical extension of the flawed policy argument by the SC could be applied in the context of Indian economy as a whole. One can question the decision to keep the Indian economy closed to foreign investment before the liberalisation process of early '90s and put a figure of loss to the exchequer.

The foreign investments that the country missed due to such flawed policy would run into trillion of dollars worth of FDI. Can the licenses issued to all domestic companies in all the sectors in the years before liberalisation be cancelled on the basis of such an argument?

If the flawed policy argument looks far fetched in the context of India's pre- liberalisation economy, the argument of having a flawed 2G allocation process and a subsequent cancellation of 122 licenses, too, fails to pass muster, especially if there is no evidence of corruption.

In the end, we can just hope that the CBI will be able to present its case in a better way in the High Court. Because if there was no scam at all, the price paid by the country in the past seven years is something that can't be imagined in numbers.