In the wake of the corruption spawned in the 2G spectrum case, and then what came to be known as “Coalgate”, the better part of this year has been consumed by the red herring inherent in the assertion that the most transparent means — and also the most effective from the standpoint of earning revenues — for the government to allocate natural resources is through competitive bidding or auction.
The implications arising from this proposition has dominated policy discourse, lent voltage to Opposition politics and distorted the functioning of Parliament.
Regrettably, the notion gained currency — and political legitimacy — through the observation of the Supreme Court in the 2G case. The presumed legitimacy of this enunciation was sought to be transferred to the coal allocations matter in the observations of the Comptroller and Auditor-General, with predictable political consequences. The bureaucracy feared being hauled up and all but stopped moving files, fearing retribution even for bona fide action. Mercifully, the court itself has cleared the air on Thursday by upholding the maintainability of the presidential reference made to it by the government. Through this reference the Supreme Court was asked if the auction method was the sole legitimate way to hand out natural resources in all cases and across all sectors.
A five-judge bench led by outgoing Chief Justice S.H. Kapadia has now held that the auction route could be one of the viable means, and the choice would be a matter of government policy. It also duly noted that the public good could not be defined only by the object of maximisation of revenue by the state (which became the virtual basis of the CAG’s findings in the spectrum and the coal cases), though that might well be the case in certain instances. It was for the government to take the call. (In the 2G case, the government had said its objective was to expand the spread of mobile phones across the country, including rural areas, for this conferred multiple benefits.) Above all, the court noted that the auction method could also be subjected to abuse, as might be the case with other ways of allocation, including through administrative action.
The mere apprehension of abuse could not be a reason for not choosing a given course as instances of abuse could be brought to the notice of the court for remedial action. While detailing its order, the court did well to refer to Article 14 of the Constitution (equality before the law), which makes it obligatory for the government to pursue policy courses transparently, openly, without discrimination, and in the light of rationality. All of this has meaning in a democracy if casino capitalism is to be firmly eschewed.