‘In the coal scam, both the BJP and the Congress have been in cahoots’


Q&A Prashant Bhushan Supreme Court Lawyer

Prashant Bhushan
Prashant Bhushan
Photo: Shailendra Pandey

In the case of the 2G judgment, many, including the government, feel that it’s a case of judicial overreach. If there is a policy that is unconstitutional or unlawful, the courts can certainly review or overturn it. But the courts cannot formulate a new policy.
What did the court do in this case? It said that there are two constitutional principles that any government has to follow. One is Article 14, which requires that equally situated people must be treated equally and that the government cannot act arbitrarily. Second, the State is a trustee of the people, and therefore, it has a duty while allocating natural resources to private corporations to ensure that the people get maximum value from it, which they can only get if you auction them. Either the people should get an equitable apportionment of those natural resources, but if not, then the people should at least get fair value for those resources. And this can only be achieved by auction.

The reiteration of constitutional principles — Article 14 and 21 — and public trust doctrine is fine. But what many are objecting to is the broad principle that all natural resources would be auctioned.
The court has said this in the context of scarce and valuable natural resources like spectrum.

So, in a way, one is justified when one says that the order could have been spelt out more clearly.
No, it is absolutely clear that this is said in the context of those natural resources that are firstly, scarce; secondly, valuable; thirdly, given out to private parties; and fourthly, for commercial exploitation. That is why they have said “like spectrum”. But that is not the clarification that the government is seeking in the presidential reference.

Then can you spell out what exactly is the government seeking from the SC?
The government is seeking that the court should overrule this part of the judgment in the 2G case, which requires the State to auction those scarce, valuable natural resources that are given to private corporations for commercial exploitation. They have said so in their reference and in their review petition.




• WHEREVER NECESSARY, as a result of legacy issues, to try and level the playing field, the government may consider allowing the existing licensees to move to the new licensing regime after paying a levy.

•WINDFALL TAXES could be used sparingly.

• STRONG AND INDEPENDENT regulators in all sectors involving allocation of natural resources.

• APPOINTMENT AND removal of regulators by a statutorily defined body and not by government’s administrative set-up.


Do you think auctioning will help in curbing crony capitalism?
Yes, it should, though it will not deal with the other problems associated with mining, such as displacement, cutting forests, polluting water and air, etc. On the other hand, there have been instances of mining leases allotted on single bid or bidding parameters, being tailor-made to favour certain players. Post-auction benefits are also given. So, there can still be problems, even with auctions, if they are dishonestly designed or conducted. Auction, by itself, may not be a solution for crony capitalism unless it is honestly done.

The UPA is now going into its ninth year. How would you sum up the UPA’s policy and performance in finding ways for efficient and equitable use of natural resources?
I was quite struck by reading PM Manmohan Singh’s PhD dissertation when I visited his college at Oxford recently. The title was ‘India’s export performance in 1952-62’ in the first two Five-Year Plans. In that, he reaches the conclusion that India’s export performance had not been very good during that decade. One of the reasons that he identifies is that India was not able to increase the export of mineral resources to the extent that it should have. Therefore, it is not surprising that when he became finance minister in 1991, he began the process of liberalising the mining sector. Prior to that, private participation was hardly allowed in mining, and foreign participation was not allowed at all. So, he liberalised these two areas to begin with. Then, he increased FDI in mining to 100 percent, so purely foreign companies could come and participate in mining. And he thought that the mining and export of our natural wealth is a good way to increase GDP growth rate, which, he has repeatedly declared, he considers to be the only indicator of the economic well-being of this country. In Africa, this is known as the mineral curse. Those countries in Africa, which are especially rich in mineral wealth, are usually the worst performers on the Human Development Index. Today, India, too, is facing the resource curse. Reckless mining may have fuelled India’s GDP growth. But the question is whose growth is it? It’s the corporate and official mafia that have grown fat on this surging GDP. And at what cost? Large-scale displacement, depriving the tribals and the most indigenous people of their traditional sources of livelihood, destruction of forests, depletion of national wealth with very little left for future generations. If you make the mining map of India and superimpose it with the forest map and the Adivasi map and the Maoist map, you find that they are all congruent. Don’t you see a correlation between all this? It seems that our PM has not learnt anything after finishing his PhD in the 1960s when the model of economic growth was based on unabated and inequitable exploitation of natural resources.

On the core issue of the most sustainable, equitable and transparent way of allocation of natural resources, where do you see the BJP or other parties stand?
By and large, there is no difference between the NDA and UPA. All the major mainstream political parties who are in power in the states or who have been in power at the Centre have been doing exactly the same thing; that is transferring natural resources to their cronies for a song by getting kickbacks or otherwise, thus looting the country. Wherever they can do so on their own, as some state governments like Karnataka have been giving mining leases on their own, they do it on their own. When they come to the Central government for environmental or forest clearance, I’m sure that the Centre must be extracting a price as well. Wherever the states cannot do it on their own, they have been in partnership with rival political formations, like in the instance of the coal scam, both the BJP in states and the Congress at the Centre have been in cahoots. It’s a policy of loot and share. None of them were interested in competitive bidding or auctions. Surprisingly, even the CPM government in West Bengal did the same thing. We are seeing this across the board.

Now that you are going to form a political party, what will be your party’s stand as far as natural resources are concerned?
One or two basic principles that we have laid out very clearly is that firstly, we believe in decentralised participatory democracy, which means, by and large, such decisions should be taken by the people. However, if you ask for my personal view, I believe that natural resources should not be given to private companies for commercial exploitation at all. This should be the job of the State. In any case, such decisions should be taken by the people, by the local gram sabhas. If mining has to be allowed in a village or a cluster of villages, the people of that village should decide whether it should be allowed or not. And if allowed, then on what terms.

Do you think your prescription is pragmatic given the increasingly liberalised economy of our country, which is deeply embedded with global market forces?
Capitalism or liberalisation does not mean you allow private monopolies. Unfortunately, in this country, even private monopolies are being allowed — like in airport management, electricity distribution and it was proposed in water distribution also. A free market postulates that you have a market, which means that you at least should have sufficient number of players to compete among themselves. In the name of capitalism, the concept of market has been corrupted and crony capitalism has been allowed. But I’m not opposed to private enterprise in those sectors where there can be effective competition.

Ashish Khetan is Editor, Investigations with Tehelka.
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