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 )
