Stung by the Supreme Court order on Thursday to cancel 122 licences for 2G spectrum, issued in 2008 on the basis of first-come, first-served (FCFS) policy, the government is set to scrap the policy for allocation of all natural resources.
Since the policy was at the heart of the scam involving allegations of arbitrary allocation of licences, the apex court judgment termed it as "fundamentally flawed" with inherently dangerous implications.A senior minister told HT: "Time has come to formulate credible market-linked mechanisms for pricing of natural resources in a transparent and open system, which dispels all doubts."
Although the government's move to abandon the FCFS policy faced opposition from several ministries - including the mines ministry - and state governments, a nine-member group of ministers (GoM), headed by finance minister Pranab Mukherjee, is already finalising a policy framework to replace it.
The GoM has accepted the recommendations of an expert group set up in January last year under former finance secretary Ashok Chawla.
The committee concluded, "FCFS is inequitable in that it gives away valuable option rights to the first applicant and is unsustainable…"
In its objections recorded with the Chawla committee, the mines ministry had pointed out that the FCFS ruled out the possibility of discretion by authorities as it was easy and practicable.
According to the ministry, auctions, on the other hand, can favour large firms with deep pockets, leading to monopolies.
On the land issue, the government is likely to adopt a competitive bidding or e-auctions methodology, especially for commercial and institutional properties.