The Supreme Court's opinion on Thursday that auctions were not the only way to allocate natural resources may have a bearing on how the government distributes scarce national wealth for commercial use in the future.
The UPA government, under attack for not calling for bids while giving exclusive coal mining rights to private firms, may now redraw its policies on a slew of resources such as minerals, land, forest rights and water. "Economic logic establishes that alienation/allocation of natural resources to the highest bidder may not necessarily be the only way to subserve the common good, and at times, may run counter to public good," the court said. The court held that overall public good, not higher government revenue, was the overriding criterion for such economic decisions.Clarifying the constitutional principles applicable to such cases, the bench said that common good was the sole guiding factor under Article 39(b) for distribution of natural resources. But the court also stated that any arbitrary decision can be struck down as violation of Article 14 of the constitution (right to equality).
An unrelenting opposition had launched a no-holds-barred attack on the UPA government after the CAG estimated in a report that arbitrary allocation of coal fields to private companies may have cost the exchequer up to Rs. 1.86 lakh crore.
"When such a policy decision is not backed by a social or welfare purpose, and precious and scarce natural resources are alienated for commercial pursuits of profit maximising private entrepreneurs, adoption of means other than those that are competitive and maximize revenue may be arbitrary and face the wrath of Article 14 of the Constitution," the bench said.
However, spelling trouble for coal block allocations that have been challenged is the fact that the court means to test the legality of these methods and strike down a decision, if there has been any arbitrariness in allocation of natural resources.
“Common good is the touchstone for any policy and, if it has met that, then any means adopted is in accordance with constitutional principles,” the Supreme Court said.Maintaining that auction can’t be the only way to allocate resources, a five-judge bench headed by Chief Justice of India SH Kapadia said the suggestion that disposal of natural resources must be for revenue maximisation is based "neither on law nor logic".
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