Welcome, as it undoubtedly is, the resignation under duress of tele­communications minister A Raja

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on the allocation of 2G spectrum, it settles little in what by all emerging accounts is the greatest financial scandal in India’s history. Never before has the extent of corruption in high places rea­ched the magnitude comparable to what the Comptroller and Auditor General estimates for the loss inflicted on the public exchequer, up to Rs 1.76 lakh crore. This mindboggling amount is equivalent to more than four times the budget of the United Progressive Alliance’s flagship social programme, the National Rural Employment Guarantee Act, and about one-fourth of the current annual revenue receipts of the central government.

The scandal could not have taken place without a comprehensive subversion of licensing procedures and gross illegality — which raises several issues at the heart of governance and the transfer into private hands of chunks of the national commons, of which the electromagnetic spectrum is a part.

Yet, the Opposition and the media remain obsessively focussed on Raja, an individual with a rags-to-riches and the-Dalit-who-embraced-the-DMK story, and his equation with DMK supremo M Kar­unanidhi. Much of the raucous debate in and outside Parliament has concentrated on whether a joint parliamentary committee should investigate Raja’s corruption. The issues at stake are much larger than an individual minister’s corruption and the lubrication of political party machines with bribes.

According to the CAG report, as many as 85 of the 122, or 70 per cent, of the cellular phone licenses issued by the department of telecommunications (DoT) in January 2008 were illegal. The report documents how some top industrialists concealed their equity holdings in telecom companies, violating the guideline that no entity can hold more than a 10 per cent stake in two telecom service providers operating in the same circle. The spectrum was sold without public auction on a first-come-first-served basis — which means selling a common property resource at arbitrary and astoundingly low prices. Within a few months, some licensees were able to resell their spectrum at many multiples of the Rs 1,651 crore they had paid. The price had been fixed in 2001, when mobile telephony was in a nascent state.

The licensees were supposed to roll out 10 per cent of their networks within the first year and all of it within three years. This was never monitored. But the condition was violated by a majority of licensees. DoT should have levied penalties of up to Rs 20 lakh a week for delays exceeding 26 weeks, or cancelled licences. This was never done. Among the reported beneficiaries were big business enterprises, including Swan Telecom (in which Reliance held equity), Unitech, Datacom/ Videocon and Loop.

The real issues all this raises go beyond Raja’s misdemeanour and corruption. First, the subversion process in DoT. How could DoT’s own eligibility norms, pertaining to minimum net worth and shareholding patterns, be violated in 85 cases? Who was responsible for the failure to monitor compliance with the implementation conditions of the licences? Why was the government’s affidavit filed in the Supreme Court without clearance by top law officers like the attorney general or solicitor general?

Second, how is the loss to the public to be recovered? This is imperative — and the barest minimum that needs to be done. You can’t have the CAG pointing to a Rs 1.76 lakh crore loss, and then fail to get the money back either through hefty fines or cancelling the licences and auctioning them at an appropriate time.

Third, the corporations that were a party to the scam or gained unfairly from it have managed to keep a low profile and evaded public attention. This won’t do. Their responsibility, culpability and manipulative methods must be brought to light through a credible investigation by a parliamentary committee or an independent commission assisted by economic and criminal investigation agencies with the requisite technical and financial expertise.

And finally, this raises the question of cleaning up India’s licensing and regulation systems. This is far more complex than made out by, say, the Planning Commission, which recommends independent re­gulators in a number of areas, who report directly to Parliament. This does not address the possibility of regulatory capture — a phenomenon witnessed to disastrous effect in the hydrocarbons sector until recently, and earlier, with the national telecom policy of 1994 and 1999.

There is no silver-bullet solution to this. What is needed is a comprehensive and systemic reform of licensing and regulation, with monitoring and verification in a transparent manner. Indian capitalism has already become notorious for the prevalence of monumental corruption in licensing, with rent-seeking and sleazy deals in every field from mining, to oil and gas, to water to the airwaves. It must be thoroughly cleansed if it is not to turn into a gigantic criminalised system which mocks at transparency, probity, accountability and other prerequisites of democratic governance.

(The writer is a Delhi-based columnist)