The decision to cancel the satellite-leasing agreement was taken when the government at the Centre was led by the United Progressive Alliance, but the lessons from this incident are no less important for the Narendra Modi government, which has sought private help in hitherto closed sectors like railways and defence. There is a glaring resource gap in various public projects, and the government is right in trying to tap the private sector to bridge that gap. However, it must ensure that work is allocated in a transparent and objective way. The process has to be designed in such a way that it is immune to manipulation. Contracts need to be fool-proof. Or else the resultant political storm can impair growth and development.
This is what happened in the Antrix-Devas deal. The two had signed an agreement in early 2005, under which the Indian Space Research Organisation was to give on lease 70 MHz of S-band spectrum from two satellites to Devas. This spectrum was to be used by Devas to offer high-speed video content on mobile devices. In return, Devas was required to pay $300 million over 12 years. In 2010, the Comptroller and Auditor General of India submitted its report on spectrum allocation in Parliament, in which it said that the policy of "first come, first served" followed by the Department of Telecommunications in 2007-08 had caused a huge loss to the government. It worked out various loss estimates, the highest of which was a massive Rs 1,76,000 crore. This soon snowballed into the infamous "2G scam", which dealt a severe blow to the image of the United Progressive Alliance government.
The Devas deal too had followed the "first-come, first-served" principle. As allegations of impropriety began to flow thick and fast over it, the Union Cabinet in early 2011 decided to cancel it altogether in an attempt to douse political fires. The argument was that S-band spectrum should be used for strategic purposes, and not for a commercial transaction. The ghost of that decision has returned to haunt the Indian Space research Organisation. Devas called the decision arbitrary and challenged it in the International Court of Arbitration. On its part, the government removed four officers over the deal and asked the Central Bureau of Investigation to look into the matter. But that didn't cut much ice. Worse, the Antrix management displayed a casual approach while fighting the case before the International Court of Arbitration. The penalty that Antrix has been asked to pay shows that political compulsions forced the then government to take a decision that wasn't quite right. K Madhavan Nair, the former chairman of the Indian Space research Organisation, too has said that Antrix ought to have provided a more reasonable justification for cancelling the Devas deal.