Very large funds are required for such infrastructure projects, and the promoters have had to raise funds in order to pay their 51 per cent stake. The modus operandi to garner funds has been to form tiers, leading to the project promoters moving towards holding as little as 10 per cent of the equity. The company that wins the telecom licence is held by a holding company, which has a 51 per cent stake.

In the telecom service provider, the foreign partner would hold 49 per cent directly. But the Indian promoters hold 51 per cent in the holding company and the foreign partner say 25 per cent and the venture capitalist the rest.

This in effect would mean that the foreign partner might technically hold upto74 per cent whilst the promoter holds only 26 per cent. Most of the Indian companies lack the technical expertise to carry through the projects on their own leading to such sell- offs to foreign partners. But there are technically competent Indian companies like Reliance and Bharti who could go all the way on their own.

In other words, in cases where there have been such sell-offs, all that has happened is that some Indian promoters have gained merely by being middlemen. It now appears that, since the middlemen have been able to reap such huge returns, the government could have gained the same benefits by selling licenses directly to the foreign companies. Undeniably, there has been much private gain at public expense.