India Phone Permit Impasse Stalls Bills on Investment

A deadlock over phone-license sales may mean India’s parliament is its least productive for any year since Manmohan Singh became prime minister in 2004, as bills to end land disputes and unlock $100 billion in investment stall.

Opposition parties have prevented discussion of legislation since the current session began Nov. 9, seeking an investigation into allegations the government sold permits at below-market rates that may have cost the state $31 billion. Singh’s government enacted 39 laws this year, the fewest since 2004, according to New Delhi-based PRS Legislative Research.

Failure to resolve the impasse threatens to hamper Singh’s goal of lifting 828 million people out of poverty even as he presided over an average 8.5 percent economic growth rate in the past five years. Companies including South Korea’s Posco, which plans to invest $12 billion in a steel mill in the eastern state of Orissa, are waiting for a bill this winter session that may enable them to acquire land and avoid disputes with villagers.

“The long agenda will be impossible to implement,” said C.V. Madhukar, director at PRS. “Potentially, it will slow the government’s aim of inclusive growth and more reforms.”

Photographer: Pankaj Nangia/Bloomberg

Manmohan Singh, prime minister of India. Close

Manmohan Singh, prime minister of India.

Photographer: Pankaj Nangia/Bloomberg

Manmohan Singh, prime minister of India.

Prime Minister Singh on Nov. 20 rejected allegations that he had delayed responding to calls to prosecute the minister who awarded the phone licenses and pledged to punish the guilty.

Raja’s Role

The Central Bureau of Investigation has been examining the role of Andimuthu Raja and the Ministry of Communications, which he headed, in the pricing of the permits since October last year. Separately, the Supreme Court has been hearing public-interest petitions on the subject.

The government sold wireless airwaves in 2008 for 123.9 billion rupees ($2.7 billion), though they were worth as much as 1.5 trillion rupees, the Comptroller and Auditor General of India said in a report to parliament in New Delhi on Nov. 15.

Raja resigned a day before India’s chief auditor said the sale “lacked transparency and was undertaken in an arbitrary, unfair and inequitable manner.”

“My conscience is clear,” Raja said after resigning, adding he would prove he hadn’t broken any rules.

The Central Bureau of Investigation told the Supreme Court yesterday that it will complete its probe by March 31.

Steepest Drop

The Bombay Stock Exchange’s benchmark Sensitive Index, or Sensex, fell to its lowest level in two months on Nov. 19 as the government faced censure over the handling of the phone permits. The gauge slid 1.3 percent to 19,691.84 at the 3:30 p.m. close in Mumbai, after earlier sliding the most in a year.

The standstill in parliament over the sale of phone permits isn’t preventing investors such as Vikas Pershad from buying Indian stocks.

“I’ve never been more bullish on the India story,” said Pershad, Chicago-based chief executive officer at Veda Investments LLC. “I have yet to find a country in which corruption doesn’t exist, and why must particular countries be consistently blamed for it? I apply a far tighter filter to investments in China and Russia than India.”

As many as 32 bills are listed for parliamentary approval in this session. Among them is an amendment to a law on how farmland is purchased for industries to help ease disputes that have stalled as much as $100 billion of projects, according to the Associated Chamber of Commerce and Industry of India.

Lost Hours

Of the 48 hours of scheduled parliament time this session as many as 42.42 hours were lost in the lower house, according to PRS.

A meeting of political leaders to end the parliamentary deadlock ended yesterday without any resolution as opposition parties sought an investigation into the license sales by a panel of lawmakers.

“We are sticking to our stand for a probe by a joint parliamentary committee,” said Sushma Swaraj, who heads the main opposition Bharatiya Janata Party in the lower house.

The standoff continued for an eighth day and both houses were adjourned till tomorrow.

Singh made “inclusive growth” the centerpiece of his economic policy since coming to power in 2004, after the electorate ended the six-year rule of the BJP. The World Bank estimates 828 million Indians live on less than $2 a day.

To contact the reporters on this story: Bibhudatta Pradhan in New Delhi at; Andrew Macaskill in New Delhi at

To contact the editors responsible for this story: Hari Govind at; Bill Austin at

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