What is the 2G spectrum scandal all about?

The Central Bureau of Investigation (CBI) on Saturday charged former telecoms minister Andimuthu Raja, Reliance ADA Group and the Indian arm of Etisalat, in a multi-billion dollar telecoms licensing corruption scandal that has rocked the government and business establishments.

Here are some questions and answers on the case:

What is the issue all about? 

The CBI say that in 2007-08, when the government issued 122 new telecoms licences, several rules were violated and bribes were paid to favour certain firms.
Several licences were issued to firms with no prior experience in the telecoms sector or were ineligible or had suppressed relevant facts, an auditor said in its report.
The violations cost the exchequer USD 39 billion in lost revenue, the auditor said, equivalent to the country's defence budget.
The telecoms ministry's process of issuing licences "lacked transparency and was undertaken in an arbitrary, unfair and inequitable manner," the auditor said.
Police have accused A Raja, the then-telecoms minister, of having taken bribes from two firms which are now the local joint venture partners of Telenor and Etisalat.

What was the fallout?

The report sparked political outrage and the main opposition Bharatiya Janata Party (BJP) all-but-shut an entire session of parliament demanding a special parliamentary probe.
Raja was forced to resign and was arrested over the report. The telecoms ministry is considering whether to cancel some 85 licences which the audit report says were issued to firms which were ineligible for them.
Many of India’s biggest business names have been questioned, including billionaires Anil Ambani, chairman of Reliance ADA group, and Prashant Ruia, chief executive of Essar Group.
A parliamentary panel probing the scandal will next week question Ratan Tata as well as Anil Ambani.

What does it mean politically?

Singh and the ruling coalition have been weakened by the events, and the BJP is seen as having regained political momentum it had lost after defeat in the 2009 federal elections.
The Supreme Court criticised Singh for not acting quickly enough against Raja, a rare censure that was picked up by the BJP to accuse the government of shielding corrupt officials.
The attacks have nearly paralysed the government but it is not in danger of collapsing as its slim majority is not expected to see defections by coalition partners and no one, including the BJP, wants general elections now.
The scandal has also touched Raja's DMK party, a leading ally of the ruling Congress party. The CBI say some of the bribes were routed through the DMK's television channel, controlled by the wife and daughter of the DMK party chief.
DMK rules Tamil Nadu, which goes to polls in April. The corruption cases could affect the electoral performance of the DMK-Congress coalition there.