NEW DELHI // The Supreme Court's decision to scrap 122 mobile phone licences, which it says were illegally awarded by the telecoms ministry, is another blow to the beleaguered Indian government.
In its judgement yesterday, the court ruled that telecoms officials had "virtually gifted away" the licences to preferred companies, costing the public billions of rupees in lost revenue.
The verdict places the blame squarely on former telecoms minister Andimuthu Raja, saying he arbitrarily fiddled the application process to favour certain companies, including real estate firms that had no prior experience in the telecoms business, and quickly sold on their allotted spectrum for huge profits.
The court criticised the decision in 2001 to "arbitrarily" fix prices at that year's levels - a decision that cost the exchequer US$36 billion (Dh132.2bn), according to an audit by the Central Bureau of Investigation in 2010.
Mr Raja was arrested and charged with corruption last year along with several officials and corporate executives, and a separate trial will determine whether any bribes were paid to fix the process.
A separate petition, seeking to investigate the role of the home minister, P Chidambaram, who was the finance minister at the time, was sent back to a lower court. It has two weeks to take a decision.
The Congress-led government has tried to shift the blame on to the previous National Democratic Alliance (NDA) administration, saying it set the rules for spectrum allocation in 2003.
"The policy was initiated by the NDA government," said Kapil Sibal, the current telecoms minister, at a press conference yesterday. "The prime minister was in no way responsible, nor was the finance minister."
But the opposition says this ignores the charge that the policy was illegally subverted by Mr Raja. It says the government of prime minister Manmohan Singh must have been aware of the fraud going on at the telecoms ministry.
"The entire policy of the government and its implementation has been held to be illegal and completely fraudulent," Arun Jaitley, the parliamentary leader of the opposition Bharatiya Janata Party, told reporters yesterday. "For the government to say it has not been indicted shows a sense of shamelessness."
There is likely to be political fallout for the government, which has spent the last two years mired in scandals and unable to pass a single major economic reform.
"The opposition will use this verdict to demand the resignation of Chidambaram and the prime minister and it will be almost impossible to pass a single bill in the next session of parliament - perhaps even the budget," said Samir Saran, the vice-president of the Observer Research Foundation, a New Delhi-based think tank.
Much may depend on the results of state elections being held across five states, including Uttar Pradesh, India's most populous state, which begins polling next week. The results, to be announced on March 6, would give an indication of how much the recent scandals have influenced voters outside the capital.
"The government will try to buy time and pin its hopes on a favourable performance in the provinces," said Mr Saran. "If they get that, they won't need to be so apologetic.
"They will see it as a chance to turn a fresh page, perhaps induct new faces into cabinet and draw a line under all this mess."
A major reshuffle of the cabinet could even touch the prime minister. Though he is renowned for his personal probity, he has faced mounting criticism for his ineffectual leadership and failure to tackle corruption in his government.
"He has lost his credibility with everyone," said Ashok Malik, a well-known political columnist based in Delhi. "A wiser person would have resigned by now."
Some feel that yesterday's verdict may at least reassure the international community that there are limits to India's graft-ridden politics. Over the years, the Supreme Court has consistently shown itself to be a bulwark against the worst excesses of officials.
Subramaniam Swamy, one of the petitioners in the case and leader of the Janata Party, said the verdict went beyond his expectations.
"It will have a very good impact for the future - it says that if you commit a crime, you cannot make a fait accompli of it," he told reporters outside the court.
But others fear it only confirms the view that India is plagued by corruption.
"India's reputation as a place of crony capitalists and opaque bureaucracy has been strengthened today," said Mr Malik.
For Anil Bairwal, the director of the Association for Democratic Reform in New Delhi, the test will be how the government responds.
"The Supreme Court has consistently passed these types of judgements," he said. "What has been wis that the politicians - and indeed the entire political class - don't pay attention."