Following the Supreme Court's judgment in the 2G case there is a fear that prospective foreign investors will be put off. Such fears seem misplaced. If anything, the verdict brings clarity and stability to government policy as rightly observed by Telecom Minister Kapil Sibal in today's press conference. Of course, with this line of argument he was trying to put a spin on the verdict to deflect the heat from his government but that's another matter.
Whether it is Telenor (67 per cent owner of Uninor), or Etisalat (45 per cent equity holder in Etisalat DB) or Bahrain Telecom (investor in S-Tel) or NTT, Tata's partner, they have only themselves to blame for the situation that they find themselves in now.
Call it greed or misplaced faith in their partners or even the belief that the Indian system could be worked any way, these foreign investors walked into their partners' arms with their eyes wide open. One of them even remarked when the scam first broke out that his company was not worried because the alleged events happened before it acquired equity in the Indian company. What kind of an argument was that? The verdict not only provides clarity on the policy the government should adopt now but it also sends out a clear signal that the rule of law shall prevail ultimately in the country. Coming so soon in the wake of the path-breaking verdict in the Vodafone tax case, this judgment underlines the integrity and supremacy of the judicial system in the country, something that should gladden the hearts of prospective investors.
The likes of Telenor and Etisalat are not the only ones to be blamed for bad judgment; we can include the banks that have lent to these companies too in the list. Precise figures are not available yet but at least a couple of thousands of crore, if not more, seems to be at risk of turning bad for a set of banks that have lent to these companies. That this includes India's premier bank, State Bank of India, certainly does not lend confidence in the project assessment capabilities of the lenders.
Keywords: Telenor, Etisalat, 2G spectrum scam, Subramanian Swamy, 2G licenses, 2G trial, Swamy plea, Chidambaram, A. Raja, spectrum allocation, Centre for Public Interest Litigation, NTT, Bahrain Telecom