India will not revoke 2G licences

A senior government official has declared that India is unlikely to cancel any of the 2G telecoms licenses that it controversially awarded in 2008, amid opposition demands for a parliamentary probe.

The Indian parliament has been effectively crippled since the news that telecommunications minister Andimuthu Raja resigned on Tuesday over the underselling scandal which caused a potential revenue loss of $39 billion.

“There is no solution by cancelling licences,” the official told reporters, adding that while the government may impose penalties to firms if a loss in revenue is found, the industry is important and can’t be “destroyed”.

India is home to the fastest growing telecom sector in the world, with over 15 million wireless subscribers a month, and is the second largest market after China for wireless services.

A report by the Comptroller and Auditor General (CAG) of India found that 13 companies which received 122 licenses for 2G bandwidth had flouted “every canon of financial propriety, rules and procedures”.

It had been suggested by analysts and investors that the CAG report could lead to licences being revoked, though this now appears unlikely according to The Wall Street Journal.

On Thursday it was proposed by the Telecom Regulatory Authority of India that 62 of the licences belonging to five of the new telecom operators should be terminated.

It is noted that new companies that were awarded licences in 2008 before starting operations in 2009 had lowered prices to less than a cent a minute to garner subscribers, while incumbents followed to retain users.

Opposition members of various parties were said to have shouted slogans in parliament demanding a joint parliamentary committee into the debacle.  There was a demand for clarification from Prime Minister Manmohan Singh on the issue, who has thus far been muted on his role in the scandal.  According to Sify, the uproar caused has led to parliament being adjourned for the sixth day running.

It had been said by the Supreme Court this week that it was worried by “the silence and alleged inaction” of the PM when an inquest had been put to him to sanction the prosecution or former Minster Raja.