Indian Supreme Court Telecom Decision Deals Blow to Government

In a serious blow to India's ruling Congress party, the country's Supreme Court has ordered Thursday the cancellation of 122 telecommunications licenses at the heart of what many see as one of the biggest scandals to hit the country. The Indian government issued the licenses to mobile phone companies in 2008.

India's former Telecommunications Minister A. Raja, who brokered the sale of those licenses to eight different companies, is in jail. He faces accusations of taking bribes and selling the licenses for less than market value, possibly costing the government up to $40 billion in lost revenue.

Prashant Bhushan, a co-petitioner in the case to have the licenses revoked, hails the Supreme Court decision as "historic."

"Now these companies which were the beneficiaries of these illegal licenses given in this dishonest manner will have to effectively refund the benefit that they got out of these illegal licenses," said Bhushan.

The court's view that the licenses were granted in an "arbitrary and unconstitutional manner" is the latest in a string of public embarrassments for India's ruling Congress Party. The 2G mobile licenses scandal has become the driving force behind accusations that Prime Minister Manmohan Singh has been unable or unwilling to contain corruption.

"The system has shown its strength," said Arun Jaitley, a leader of India's main political opposition, the Bharatiya Janata Party. "The system has now hit back. and while hitting back, the kind of repercussions are going to be earth shaking."

Political opponents of Prime Minister Singh are calling for the resignation of current Telecommunications Minister Kapil Sibal, as well as Home Minister P. Chidambaram, who was finance minister when the licenses were sold.

Sibal has continually defended Chidambaram and the prime minister, saying his predecessor in the telecommunications ministry was acting on his own.

"The prime minister was in no way responsible. Nor was the finance minister in any way responsible for whatever happened and whatever was done by the then-minister," said Sibal.

Political analyst Prem Shankar Jha says Prime Minister Singh needs to respond personally to Thursday's verdict.

"The prime minister cannot shift this burden. His reaction must be clear, sharp and immediate. This is what has been lacking throughout the last seven and a half years," said Jha.

Indian telecommunications officials say Thursday's Supreme Court decision is only likely to affect about five percent of the country's mobile phone users. New licenses are to be auctioned in four months.