Supreme Court replies on the presidential reference on auction of natural resources – Congress gloats

In the course of a historic decision where it cancelled all the 2G licenses awarded by A Raja (the then telecom minister of the UPA Government), the Supreme Court also made a statement about distributing scarce natural resources through an auction process. This was something scary for the Government, since it would mean that whatever the Government was doing for mines, minerals and others was not meeting this statement, exposing the Government to more scorn. Now, in the normal scheme of things, the Government would not face too much flak for its policies, but this was a time period after a number of scams, and the reputation of the UPA Government was in tatters. This was serious stuff for the Government, and you could recognize that there were problems with the decision of the Supreme Court. As a result, the Government files a Presidential reference asking for confirmation of the previous judgment of the Supreme Court. The court accepted this, but at the same time, refused to re-open the 2G case, with any judgment talking about other areas besides telecom. For the court, the order cancelling the 2G licenses was final, with no further review possible; although the Government would have hoped that the court might even re-open the 2G case.
As a practical matter, the earlier judgment by the Supreme Court was very simplistic. Each and every natural resource that is there in the country has a different set of policies, with different policies and processes for minerals vs. natural gas vs. water, and so on. To a large extent, one can agree with the Government that the court should not be trying to make policy, since that if the duty of the Government, and of Parliament. The judgment of the court for the Presidential reference was very clear with regard to policy, stating that the court cannot review one policy against another one, and it has to depend on the Government for doing so. And this is where the Congress is gloating, claiming that the court had validated all its arguments on not aiming for profit maximization, of aiming for policies that work best for the aam-admi, and so on.

However, the Government is missing something essential. Rather, these eminent Congress lawyers know the truth, but are concentrating of making political arguments that aim to push back hard against the opposition parties. However, this is a serious issue that the Congress does not seem upto tackling anymore. The same judgment by the court also made it clear that even though it would not get into policy decision, any action by the executive that seems unfair or is against the following grounds, “fairness and non-arbitrariness”, will be subject to judicial review.
Now, the reports by the CAG look at the actions by the Government and look at the cost of these decisions. It is a tricky area, since the executive can claim that a decision was a policy decision and any loss in that was because of public interest. This was the Government defense in the 2G case, and this was there in the coal allocation scam. However, in the 2G case, the court ruled that the entire method of allocation was vitiated and hence unfair, while the CAG held that the cost set by the Government was denying revenue to the Government. The Government argument was fine if not for the fact that the licencees who got their licenses at the cost set by the Government were able to attract huge amounts of money as share-holding and were yet expected to provide telecom at low rates. In such cases, there would have been no difference if the Government had sold these licenses at 5 times the rate at which it did, since this was the ultimate cost to the telecom company that finally deployed these licenses.
Similarly, in the coal allocation controversy, the Government refused to go in for auction even though coal department secretaries and legal counsel had stated way back that this could be done. Further, the Government argument was that these were provided cheap to power companies to reduce overall cost of power, but almost all of these allocated blocks have not yet started producing coal even after many years, knocking out the main argument of the Government. And to raise the unfair nature, the screening committee that allocated blocks did so in a manner that had no transparency, raising the huge fear that politicians would have been involved, either to get blocks for their friends and families, or else to raise bribes for these allocations. Given the opaqueness of the system, believing that politicians were on the take is not hard to believe, not for me, and not for most of the citizens of this country. In that way, I believe that the Congress is misreading the situation and the judgment. Its policies will continue to be challenged on the fairness challenge.

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