Time and again, the state has let down the people by distributing their natural resources in any way it deems fit
The Comptroller and Auditor General of India (CAG) report on coal block allocations tabled in Parliament last month forces us to raise an important question: who is the real owner of India’s natural resources and how should their use be determined?
This question had already been posed to the Supreme Court by the petitioners in the 2G spectrum case. In its weighty verdict, the court pointed out that “no comprehensive legislation has been enacted to generally define natural resources and a framework for their protection.” It was precisely this situation that prompted the court to attempt a definition of natural resources and principles governing their use. But, after examining various international conventions and customary international law, common law and national constitutions, it came to the rather unfortunate conclusion that: 1) the state is the legal owner of the natural resources as a trustee of the people, and 2) auction is the best method for alienating natural resources.
This conclusion contradicted the court’s own observation that “it [the ownership regime relating to natural resources in international law] rests upon the concept of sovereignty and seeks to respect the principle of permanent sovereignty (of peoples and nations) over (their) natural resources…”
Monopolies as beneficiaries
The Supreme Court declared that the state will act as the trustee of the people in alienating natural resources but no attempt was made to examine whether the people have really given the state the right to act as their trustee. Time and again the Central government has not acted in good faith as the trustee of the Indian people. Whether it is in the allocation of telecom spectrum, or the allotment of oil and coal blocks, or the acquiring of land for “public purpose,” the ultimate beneficiaries have been only a handful of monopolies.
If the state does not act like a trustee, does it matter whether resource allocations are done on a first-come-first served basis or by auction? It is not very difficult for powerful monopolies to collude, and to pass on the additional cost of competitive bidding to consumers through increased tariffs, as the response of telecom monopolies to the proposed auction of spectrum confirms. It is common knowledge that a small number of monopolies control the lion’s share of the market in these sectors. Assocham’s assertion that “if the (coal) blocks were auctioned, they would have pushed up the sale price of these basic industries, crucial to the entire economic value-chain” only corroborates this argument.
Existing Indian legislation on natural resources is premised on the colonial concept of Eminent Domain — which gives the state unrestrained power to use the natural resources of the people as it deems fit. The people are just helpless spectators. Unless this alienation of the people from their wealth without consent is set right, it does not really matter which method is used to allocate natural resources to profit-hungry monopolies — the nomination method or the auction method.
Constitutional flaw
A major flaw in our Constitution is that it does not recognise the right of peoples, tribal communities and collectives to the natural resources in their territories. Instead, Central institutions have supreme power to award licences to extract major minerals and other natural resources. In the absence of the right to have a say in the disposal of what lies on or below their land, local communities who oppose the plunder of their natural resources in Orissa, Chhattisgarh, Jharkhand, Assam and other States are called “extremist” or “secessionist” and their struggles put down brutally.
In its judgment, the Supreme Court also referred to the doctrine of public trust and quoted Prof. Joseph L. Sax’s observations that “the public trust doctrine enjoins upon the Government to protect the resources for the enjoyment of the general public rather than to permit their use for private ownership or commercial purposes. This doctrine puts an implicit embargo on the right of the State to transfer public properties to [a] private party if such transfer affects public interest, mandates affirmative State action for effective management of natural resources and empowers the citizens to question ineffective management thereof.”
The observation of the Court that there is no comprehensive legislation on the use of natural resources, leave alone control mechanisms for the people, should be seriously addressed by the Central government. Instead of coming to quick and misguided conclusions on the method of alienation of natural resources, it should generate a wide public debate to determine the contours of a comprehensive legislation that ensures the right of people over their natural resources.
(The author is the president of the All-India Council of Lok Raj Sangathan. E-mail: lokrajsangathan@yahoo.com)
Keywords: Natural resources use, coal blocks allocation, 2G spectrum, CAG report
Government allocated the coal blocks in total violation of supreme court judgement that natural resources are public properties and prevailing government is only trustees and natural resources could only be allocated through auction.And since natural resources are public properties CAG has every right to audit the transactions related to natural resources and none can challenge it.Both the political formations that has ruled India post-independence,with a few exceptions, are responsible for the irregularities In a bid to keep these facts out of public eye we witnessed the drama of mutual recriminations in the last monsoon session of Parliament.
A very thought provoking article, that raises some very fundamental
questions related to the question of ownership of natural resources. who
owns these natural resources and how they must be exploited for the
betterment of the society keeping in view the right of people as well as
the conservation of natural environment.
Indian Constitution do recognize the rights of the People over the
natural resources but the Laws are not in corrospendce with the
directive principles of the Constitution.Most of the laws and rules
are being continued from colonial regime which was based on the
concept of Eminent Domain.There is a conflict between The
Constitutional rights and the prevailing Governance. Appropriate
legislations have to be made to ensure the sovereign rights of the
communities on the natural resources.Forest Right Act, 2006 is one
such legislation and similar legislations have to be made for non
forest areas.But there is another problem.Most of such legislation are
not implemented because of the conflict of interest between the people
of India and the Indian State.So, there are struggles at two
different levels.One for bringing the legislation and the other is on
for effective implementation. Struggle for effective implementation
is the most difficult and complex part of the struggle.
Mr. Raghavan has raised the most important issue concerning the mineral wealth of
our country. They rightly belong to the native population who have to sell their land
and get displaced from their traditional occupation, way of life etc. The new land
acquisition policy addresses this problem , but what about the past? In fact, one way
out of the coalgate jam would be to steeply increase the royalty payable to the state
govt. ( to the extent of the windfall profit gained by the allottees), keep it in a
separate fund to be spent in improving the quality of life of the dispossessed people.
To some extent this will wean them away from the Maoists.
The author has a historically erroneous view of the state and the courts. Contrary to the belief of political liberals the state its accompanying institutions are neutral entities hardly neutral entities. Based upon the historic reasons for these institutions coming into existence, it is the job of social sciences to unearth and reveal their true underlying purpose.
During the evolution of social systems it is quite possible for courts to display a progressive character such as the classic example which is repeatedly cited; the Warren court in the US. The progressive reforms associated with this court however, are now being systematically dismantled.
The courts and the government exist to uphold the existing social order based upon the domination of a particular social class. It then follows that asking the government to reform itself is entirely misplaced as it exists for a purpose other than to mete out justice or democracy.
Britishers left India long ago , but the process of “drain of wealth”
continued to survive and grow. The unholy nexus between politicians
,bureaucrats and businessmen has led to crony capitalism where big
corporate houses are prospering not because of their efficiency and
entrepreneurship ,but because of favouritism and corruption .And this
has led to creation of few islands of prosperity in oceans of poverty
with tribals and locals being the ultimate sufferers.
If the natural resources belong to the people of India, another question to be raised about the black money stashed abroad. Since that money is actually payable to people's government of India by corporates and individuals by paying rightful taxes and by politicians and industrialists depositing their illgotten commission in shady deals. So people of India are the owners of that money and it should be brought back to national treasury.
India, not surprisingly considering the regional diversity, forms one of the most
prominent example of regional disparity. It is difficult to find another place in this
world where few provinces have grown over others literally walking over them and
their natural resources.
The article explains the inability and the hapless plight of the people, who are dislocated from their land by the government. But calling the absense of right of natural resources in the constitution as a flaw, doesn't sound right. Any natural resource in the territory rightfully comes under the authority of the government. And it is better that such a right is not awarded to individuals. It may result in widening the inequality, deepening poverty and also ruthless exploitation of the resources for monetary benefit. Not only should the government ensure judicious utilisation of these resources but it should also bring in a legitimate compensatory mechanism which should ensure that people are not left in the dark and the feeling of deception should not creep in. Unfortunately, the government has evidently failed in the latter.
I was smiling like a retard over a fortnight seeing the debate on
#coalgate at different Patriotic News channels.
Thanks to The Hindu through your well meaning articles and op-eds, you
give readers a balanced perspective
Thanks again,
Chandresh
A thought provoking article. However, I feel that a comprehensive legislation on use of natural resources would be a utopian concept. A trustee needs to have vision, foresight and needs to act judiciously. This would mean balancing interests of various segments of the population and there could be no uniform law that would apply to each case and situation. The author writes about the rights of tribals, local people. What about the rights of the future generations? We know all natural resources are available in limited quantities. Should we exhaust these resources in great hurry, whether by allocation or auction to satisfy our present needs? What about ecological concerns? Thus, ultimately it is a balancing act which cannot be defined by a single legislation.
Nice article Mr. Ragavan. No wonder our politicians and special interests are swindling the natural resources in the name of development.
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