It is clear telecom minister A. Raja’s decisions have cost the government dear. Raja’s mistake: He did not auction licences for mobile phone services and instead issued them on the basis of laws that are at least four years old. So, companies were able to enter the sector paying a licence fee that was considered fair in 2004, when India had 51 million mobile phone subscribers.
In April 2008, when spectrum was allotted to the new entrants, India had 270 million. Between 2004 and 2008, India has emerged one of the world’s most attractive mobile phone markets—one reason the firms that got the new licences were able to sell stake to foreign telcos for multiples of the fee they paid.
Prime Minister Manmohan Singh is unlikely to fire Raja because that isn’t his style and Raja belongs to the DMK, an ally of the Congress and the party to which the telecom ministry seems to have been promised for the duration of this government’s rule. That’s a pity: The telecom policy needs an overhaul and it would be best to start at the top—with the top?telecom policymaker.