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The SC verdict on natural resources serves to curb discretion within the government.

india Updated: Sep 29, 2012 01:16 IST
Hindustan Times

The Supreme Court’s clarification that all natural resources need not be auctioned by the government dispels some of the policy-making uncertainty that followed its ruling on auctioning radio frequency for mobile telephony. The response to a presidential reference gives the government the freedom to choose the best method for parcelling the common wealth for commercial development. This should allow the UPA some wiggle room on economic decisions frozen by the prospect of judicial overreach. It will also help defuse the political tension that has built up over notional losses to the exchequer in the allocation of spectrum and coal blocks for captive mining by industry. More importantly, by iterating a long-held judicial position that policy is the exclusive preserve of the executive, India’s judiciary is emphasising the status quo in the balance of powers. With a caveat: it reserves the authority to quash arbitrariness within the framework of a stated policy.

This is where the order cancelling 122 licences to telecom companies fits in. The ruling does serve the public interest in curbing discretion within the government. But it could not have been the basis of all future allocations. Imagine the cost of housing if municipal bodies were to insist on only open auctions for land developed by them. The government was justified in seeking a clarification on whether the order for auction extended to areas beyond telecom. Now it can choose from any of three broad approaches: make the applicants queue up, draw lots or ask them to bid. Each process fits a specific situation. Bidding works best when the queue is not very long while lotteries do a good job with large numbers. Unfortunately, all of them are open to abuse. Queues can be jumped, lotteries rigged and auction bids fixed. Without policing, none is inherently superior to the other two. To the extent that lotteries and early-bird schemes tend to create a black market, the original purpose of keeping prices low is defeated. Collusive bidding, on the other hand, depresses the market price of an asset, which could be the lesser evil when farming out finite natural resources like land, minerals or airwaves.

Choice of the end is meaningless without choice of the means. Since the courts are not meant to go into the outcomes of policy, they are wise in leaving its conduct to its makers. India’s governments, present and future, will also be prudent in the pursuit of the public good in the knowledge that abuse of power cannot seek immunity from judicial review. This compact needed to be explicit and it has taken a groundswell of anger against graft and patronage for public statements on the terms of engagement by both the executive and the judiciary.

First Published: Sep 29, 2012 00:34 IST