Natural resources need to be treated as public assets

The government of India, after a lot of deliberations, sought a review of the recent decision of the Supreme Court cancelling the 2G spectrum licenses, but the review petition was rejected by the court.

According to the government, the Supreme Court had overstepped the limits of judicial review of government action by carrying it to the policy decisions.

Just to be clear, the policy in question was allocating 2G spectrum ‘free’ to companies which would then make commercial use of it and charge customers for use of the airwaves. The development underscores issues at the root of the debate on natural resources, such as mineral deposits and broadband spectrum. What is the character of resources such as mineral deposits and broadband spectrum?

Are they largesse to be distributed as the government pleases, without checks on its powers – such as a judicial review? If the answer is ‘yes,’ the position is aligned with the British colonial model and increasingly outdated notions of sovereign power that expand and strengthen the government. The framework discourages challenges to governmental power.

An alternative approach is to treat the resources as public in character. If this is accepted, then the duty of a democratically-elected government exercising jurisdiction over them is to act as a trustee for the public interest. The constitution proclaims India as a republic. Considering this fact, treating the natural resources as public assets is more appropriate. It is consistent with the democratic character of the country’s polity and emerging notions of accountability in public administration. It is about power coupled with responsibility, and reflects the classical ideal of dharma.

In the allocation of 2G spectrum and in seeking review of the Supreme Court decision, the telecom ministry had argued that promoting the growth, affordability, penetration of wireless services in semi-urban and rural areas and maintaining a level-playing field between existing and new licences outweighed the consideration of maximising government revenue. This appears to be a recent stance and it is not clear if the government argued its case before the Supreme Court in this fashion.

Free believing

In any case, even if the government wanted to allocate the spectrum for free believing it to be more beneficial, it would still require transparency. There must be sufficient transparency both in the formulation of policy and in the systems developed for allocating the spectrum, especially when allocation is free for companies that receive them. As already pointed out, while wireless companies could use 2G spectrum for free, ostensibly in the public interest, the facts remain that they will use the spectrum to make a profit from their customers.

Other questions are about the level of responsibility that should inform the decision of the government, which runs phenomenal deficits, to forego revenue. Can this be done casually and without a debate on the issue? The government’s position on spectrum allocation shows little sensitivity to these aspects.

The government, apparently, questions the powers of courts to review government policy. In this effort, it relies on older cases – namely, Garg v. Union of India (1981), Balco Employees v. Union of India (2002) and Bombay Dyeing v. Bombay Environmental Action Group (2002), to argue that the court is bound by its own rule of non-interference with policy. But the problem is that ‘policy’ is too broad and amorphous as a concept. Eliminating judicial review of policy will leave a large vacuum in the polity. It fits ill with ideas about democratic governance, probity in public administration and accountability.

Specifically in 2G spectrum allocation, there were also other issues with the government’s opposition to judicial review of ‘policy.’ These are about the manner in which policy was formulated and the underlying considerations.

The considerations now advanced by the telecom ministry – namely, social benefits outweighing the interests of revenue were not made public. Nor was there any open debate on 2G spectrum free of cost. It is hard to defend the policy decisions of a government running deficits to forego potential revenue, especially when they facilitate private companies to earn profits from their wireless customers who are presented as the beneficiaries of the policy.

It is possible to interpret the ongoing debate as a symptom of the difficulties the ruling establishment faces in coming to terms with the emerging reality. Governmental structures are steeped in power and the methods are authoritarian. Over the last six decades of independence, the tendency has been to use these features for the benefit of entrenched interests.

Understandably, conflict arises when such established structures and practices are challenged.
Finally, another important aspect has not received the attention it deserves. This is about application of the resources the government raises from the allocation of natural resources for commercial use – be they mineral deposits or broadband spectrum. With the prodding of the Supreme Court, the government has finally come forward with a plan to auction broadband spectrum. This is about generating revenue.

Attention to how the money will be spent is equally important. This will be a new source of revenue and is related to the use of capital assets – namely, natural resources. Efforts must be made to ensure that the resources generated are used to build valuable and socially-beneficial new public assets, and are not squandered away.

(The writer is an assistant professor of Common Law at the University of Ottawa, Canada)