Very little is certain in economics. Possibly the best thing for our economic future would be unemployment in excess of 63%, high enough for the two programmers

Very little is certain in economics. Possibly the best thing for our economic future would be unemployment in excess of 63%, high enough for the two programmers in Atlanta who currently carry in their brains the complementary halves of an all-important tech insight to meet in an unemployment line, put their heads together, and revolutionize our economy! But that's not the way to bet. In general ordinary limited assets like spectrum space, or agricultural land, or airport landing slots, or electricity, or food can be used better by some actors than others. If your economy doesn't allow them to be traded freely, it's an extremely good bet that the economy will throw away important efficiencies, because whoever currently has the right to control the asset doesn't have good incentives to pass it on to someone with a really good use for it. Thus e.g. human food being fed to pigs, or water being used to grow rice in a desert, or various ways that rent-controlled properties get underutilized. You seem to be assuming that the allocation of spectrum will be like that (that now that they're "spread more widely" that pattern of control is fixed in stone). If so, the Indian economy can expect to lose a lot of the potential value of the spectrum because people who in 2012 have really effective ways of using it can't get to it, and it instead it gets used in whatever way is technically feasible for the organization which was ushered to victory in the race through the permit Raj ca. 2008. This isn't just some obscure academic possibility. Consider various historical uses of spectrum in the US. E.g. various religious organizations had valuable spectrum they couldn't sell freely, or even use freely, but they were allowed to use it to broadcast sermons and the like, so they did. I dunno what the analogous lockup of assets in India will look like in detail, but in broad outline the gross waste could easily be similar. Conversely, if you allow spectrum to be traded freely, that disadvantage goes away, but then the "spread more widely" pattern that you consider an advantage, or for that matter anything else you like about the distribution of handouts, tends to go away too. The runout effect tends to be what another poster already pointed out, that the sham auction effectively gave the assets away for arbitrarily low prices to selected customers, and now those selected customers will be able to collect a fortune by exchanging their control of those assets for something closer to the assets' market price.