Let’s say GoI wants to utilise its spectrum resources (which is a national resource belonging to people of India) for development purposes. Ideally this is done by state owned telecommunications companies for various reasons - major being that of national security. #2GScamVerdict
Now if state telco lacks expertise or funding it is sourced from private sector. Since Liberalisation & Privatisation GOI chose to auction spectrum whereby Govt sold licences to transmit signals over specific bands & assigned scarce spectrum resources to private/foreign players.