The lightning-paced growth of India’s mobile telephony market would unleash socio-economic forces that threatened to overwhelm the country’s institutions, one of the world’s leading telecommunications companies has warned.

Ben Verwaayen, the chief executive of Alcatel-Lucent, the French telecommunications company, said on Monday that the extension of mobile internet services among the world’s second most populous nation was a “journey into the unknown” that would feed a tide of rising expectations.

“I’m not sure institutions are ready for the enormous increase in participation,” he said at the World Economic Forum’s India meeting.

Local government, which was based on “non-participation”, was one institution that would face the “tsunami” of mass communication among the country’s 1.2bn people. But more widely, he said, advanced telecommunications would leap over state and national boundaries in the region.

Recently ICICI Bank, India’s largest private bank, accused an unidentified cartel of traders of conducting an SMS smear campaign that provoked a run on bank deposits at some of its branches. Elsewhere in the region, the resistance movements in Tibet and Burma have successfully used mobile phones to mobilise people against the military junta.

India’s mobile telephone market is seen as being one of the most attractive in the world. The country has an estimated 315m mobile subscribers and a penetration rate of only 27 per cent of the population.

An astonishing 10m new subscribers are added to the network a month, as India’s mobile operators compete for low income customers. The average revenue per user is estimated at $7 (€5.60, £4.80) – one of the lowest in the world – with some services offered for as little as Rs1 a minute.

The growth of the industry is routinely held up as an example of the promise of one of the world’s fastest growing economies.

“Everything that is virtualised [in India] is a success, everything that needs land and roads goes slow,” said Williem Elfrink, executive vice president of Cisco Systems, India.

Mobile telephony is expected to raise productivity among India’s farmers and boost economic growth. Telecommunications executives also say that increased access to communication will lead to better provision of health, emergency and educational services. But Mr Verwaayen said India’s political establishment would have to ask itself “Do you really want to harvest what is available?”

Egidio Zarrella, global partner for KPMG, the professional services firm, said the social change technology would open up a Pandora’s box among India’s rural poor. “If you give technology to farmers or poor people it will have a number of empowering ramifications ... which will be hard to control.”

“Once you give them the technology, it’s like giving then a Pandora’s box. When they open it, it’s open and, no matter how much you try, there is no way of controlling it…Government and institutions will have to manage the social change.”

Financial services is one area likely to be transformed by mobile internet services. “The financial industry is going to be very big. The amount of cash that travels in trains in India is more than is in the banks,” said Jai Menon, director of innovation at Bharti Airtel, an Indian telecommunications company.

The International Telecommunications Union, the Geneva-based United Nations agency, forecasts that India, China and Russia will account for more than 1.3bn mobile subscribers by the end of this year.

Additional reporting by James Fontanella-Khan in New Delhi