Developing Telecoms | Indian Telecoms Minister resigns over 2G allegations

22 May 2012

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Indian Telecoms Minister resigns over 2G allegations

Tuesday, 16 November 2010 12:06 | James Barton

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India’s Department of Telecoms has been hit by allegations that have forced the country’s telecoms minister, Andimuthu Raja, to resign. The department is believed to have sold 2G spectrum licences for far less than they were worth, thereby costing India billions of dollars.

Although Raja maintains that he is innocent, he has acquiesced to Prime Minister Manmohan Singh’s suggestion that he leave his post to “avoid embarrassment to the Government and maintain peace and harmony in parliament.”

Raja has reportedly been under investigation for the allegations since last October, following a raid on the telecoms ministry by government investigators. His resignation appears to have been precipitated by India’s chief auditor accusing his department of losing revenue worth INR900 billion (US$20 billion) by drastically underselling 2G spectrum.

The issue has threatened to turn into a political headache for India’s government, with the opposition part Bharatiya Janata deeming Raja’s resignation a “victory for democracy”. The party had long been making calls for the minister to step down.

The Department of Telecoms issued the 2G licences in 2008 to several private operators; this act has become the Central Board of Investigation (CBI)’s focus, as allegedly no auctions were held, with the licences issued on a ‘first come, first served’ basis.

To compound the absence of competitive bidding, the licences were severely undervalued as the prices for them were calculated based on rates from 2001. Many of the buyers have since sold their stakes for a significant profit – often to foreign operators, including Etisalat and Telenor.

In an official statement, Raja claimed: “I will prove my innocence, I did everything in accordance with the law.”

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