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Breach of trust

The SC spectrum judgment seriously undermines the sarkars credibility

Jug Suraiya

The Supreme Court judgment in the 2G spectrum case,which cancelled the licencesof 122 mobile service providers,has been hailed as a watershed ruling.The courtsverdict in favour of the auctioning of natural resources instead of allocating suchresources on an arbitrary first-come,first-served basis,as was done in the spectrumcase will have far-reaching consequences.Laudable as the SC judgment is,thecancellation of licences of the 122 operators does have a downside.For the

customer,the most likely repercussion is to be a hike in mobile tariffs,as the shake-out will reduce competition and prompt the remaining players to hike rates.For thecash-strapped government,the reallocation of the cancelled licences throughauctioning could prove a Rs 1.70 lakh crore bonanza.But this short-term gain couldprove to be a long-term loss,in terms of Indias already shaky reputation as adesirable business destination for foreign investors.The SCs order cancelling licences which had been awarded by the then governmentof the day calls into question the credibility and authority of sarkari decision-making.In effect,this means that an agreement between the government and anothercontracting party is not worth the paper its written on and can be overruled by a courtof law.Two of the affected operators,whose stakeholders include Russia and Norway

respectively,have reportedly raised this issue and are pursuing legal and diplomaticchannels to protect their interests.The credibility of any government is based on the sanctity of contract,that anycontract signed by the government will be legally binding.The spectrum ruling hasnot just dented but demolished the governments credibility in this regard.Themessage that has been sent out globally is that the Indian government not just UPA-II,but the NDA government as well,during whose tenure the first-come,first-servedsystem was adopted cant be trusted to honour the contracts it undertakes,which canliterally be thrown out of court with retrospective effect.In the spectrum case,the serious undermining of the governments credibility comesat a particulary bad time for Indias economy,which because of external and internalfactors has significantly slowed down from a projected 9% growth rate to a doubtful7% for the current year.India urgently needs an infusion of foreign investmentparticularly in the all-important infrastructure sectors of roads and electricity wheremost of the bottlenecks are to revitalise its weakening economy.Which investmentadviser would direct a client towards India,following the spectrum fiasco and thegovernments breach of trust that it involvesFollowing the SC ruling,telecom minister Kapil Sibal is quoted as saying: Protectionof (investor) interests is not the function of the government. Thats where thehonourable minister is totally wrong: protecting the investors interest is or ought to bethe most important function of any government,because it is only on the basis of

such protection that it can claim any credibility.But then its not just the UPA-II but all Indian governments which for over 60 years

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have successfully washed their hands of all responsibility of protecting the interestsof that most faithful,optimistic and never-say-die of all investors.And that investor isthe Indian voter who has been repeatedly short-changed through breach of trust byevery inefficient and corrupt government voted into office.