An extremely efficient auction of telecom spectrum brought out so many evils in the Indian economy that I now wonder how shaky foundation is our nation built on.
First the facts - Inspired by other nations who made a fortune from 3G auction, our government hired lazard to conduct the prized auction in similar fashion. The big hope was to generate 35,000 cr so as to fund the bloated expenditure bill of government. The auction collected 105,000 cr as Bharti.Vodafone Tata and Reliance fought the battle for exclusivity.
1. This was the genesis of 2G scam. The revenue department quickly realized that the license fee that it got for 2g was a mere pittance. With this realization, parliament stopped functioning, ministers head begin to roll and skeletons began popping out of closet. The political turmoil that followed was no great news for stock markets.
2. This sucked the life out of banking system. It took some months for banks to realize that it truly was a lethal blow and then they began pulling all levers raising all rates frantically. Meanwhile the lifeguard of monetary policies, RBI, was tightening at snail's pace.