Who owns the natural resources of India?

In my opinion, the recent judgement of the Supreme Court of India in the writ petition filed by the Centre for Public Interest Litigation against the Union of India, popularly known as the 2G spectrum case, requires wide discussion. The judgment reversed the earlier allocation of 2G licenses and recommended the auction method in place of the first-come-first served method in the allocation of spectrum. Both the Auditor General’s queries and the Presidential reference have concentrated on this aspect of the judgment -- the method of allocation. But to me, the issue that needs to be sorted out now is not the method of allocation of spectrum, but the issue of the ownership of the natural resources of the country.

Among the five questions raised in the writ petition, we are concerned with the first one here, which reads: "Whether the Government has the right to alienate, transfer or distribute natural resources/national assets otherwise than by following a fair and transparent method consistent with the fundamentals of the equality clause enshrined in the Constitution?"

In its judgment, the Supreme Court first attempted to define what constitute natural resources and then proceeded to state its position on who has the right to distribute the natural resources. For a good understanding of the judgment I am constrained to quote rather exhaustively from it. I beg the patience of readers.

Attempting to define what constitutes "natural resources", the judgment clarified that "At the outset, we consider it proper to observe that even though there is no universally accepted definition of natural resources, they are generally understood as elements having intrinsic utility to mankind. They may be renewable or non renewable. They are thought of as the individual elements of the natural environment that provide economic and social services to human society and are considered valuable in their relatively unmodified, natural form. A natural resource’s value rests in the amount of the material available and the demand for it. The latter is determined by its usefulness to production".

The judgement then goes on to say that "Natural resources belong to the people but the State legally owns them on behalf of its people and from that point of view natural resources are considered as national assets, more so because the State benefits immensely from their value. The State is empowered to distribute natural resources. However, as they constitute public property/national asset, while distributing natural resources, the State is bound to act in consonance with the principles of equality and public trust and ensure that no action is taken which may be detrimental to public interest. ...In Article 39(b) of the Constitution it has been provided that the ownership and control of the material resources of the community should be so distributed so as to best sub-serve the common good, but no comprehensive legislation has been enacted to generally define natural resources and a framework for their protection. Of course, environment laws enacted by Parliament and State legislatures deal with specific natural resources, i.e., Forest, Air, Water, Costal Zones, etc". (emphasis by author)

In effect, the judgement argues, sort of, that even though a comprehensive legislation to protect natural resources is not there, leave alone the mechanisms, as long as we trust the Indian State to "act in consonance with the principles of equality and public trust", we can be rest assured that it will distribute natural resources for the "common good". Our experience so far with the Indian State completely contradicts this pious wish. Whether it be airwaves, telecom spectrum, energy resources or land, all that we can see is the extreme monopolisation of these resources by a few multinationals, and huge profiteering at the expense of people.

Let us read further into the judgment. If there is no legislative framework to govern the use of natural resources then how on earth do we decide on the ownership? The judgment continues "The ownership regime relating to natural resources can also be ascertained from international conventions and customary international law, common law and national constitutions. In international law, it rests upon the concept of sovereignty and seeks to respect the principle of permanent sovereignty (of peoples and nations) over (their) natural resources .... Common Law recognizes States as having the authority to protect natural resources insofar as the resources are within the interests of the general public. The State is deemed to have a proprietary interest in natural resources and must act as guardian and trustee in relation to the same. Constitutions across the world focus on establishing natural resources as owned by, and for the benefit of, the country. In most instances where constitutions specifically address ownership of natural resources, the Sovereign State, or, as it is more commonly expressed, ‘the people’, is designated as the owner of the natural resource". (emphasis by the author).

The judgment gets into very murky waters from here. Starting from the principle of permanent sovereignty which declares (not in the judgment) that

"The right of peoples and nations to permanent sovereignty over their natural wealth and resources must be exercised in the interest of their national development and of the well-being of the people of the State concerned",

the judgment comes to the rather unfortunate conclusion that it is the State which should have proprietary interests over natural resources and act as a guardian and trustee!

The Supreme Court judgment also quoted observations from another judgment Reliance Natural Resources Limited v. Reliance Industries Limited, (2010) 7 SCC 1, P. Sathasivam J., with whom Balakrishnan, C.J., agreed, made the following observations: "It must be noted that the constitutional mandate is that the natural resources belong to the people of this country. The nature of the word "vest" must be seen in the context of the public trust doctrine (PTD). ...This doctrine is part of Indian law and finds application in the present case as well. It is thus the duty of the Government to provide complete protection to the natural resources as a trustee of the people at large." (emphasis by author)

After this tortuous route, the Court concludes that "we hold that the State is the legal owner of the natural resources as a trustee of the people and although it is empowered to distribute the same, the process of distribution must be guided by the constitutional principles including the doctrine of equality and larger public good".

The conclusion of the Court amounts to this -- notwithstanding that international law upholds the principle that sovereignty over natural resources should vest in the people and nations, it is the State that should act as the proprietor of natural resources and as a trustee of the people in distributing its largesse. How can this conclusion be accepted?

The notion of the state and elected representatives as the trustees of the people was first put forward in the 18th century by Edmund Burke, a member of the House of Commons of Great Britain and known as philosophical founder of modern conservatism. He was a vocal opponent of the French revolution in the British Parliament. He put forward this as a model of representative democracy where constituents elect their representatives as ‘trustees’ for their constituency. These ‘trustees’ will have ‘sufficient autonomy’ to act for the ‘greater common good’ and ‘national interest’. But his own involvement in Indian politics seems to have forced him to reconsider his theory of trusteeship. During the course of the debate over India, Burke came to realize that the theory could not work there because Indians shared few political values with their English rulers and were unable to call those rulers to account.

Mahatma Gandhi gave this notion of trusteeship an Indian flavour. He put forward a proposal of a Gandhian political and economic system where the rich will act as the trustees of the poor. In an article in Young India he ventured to say, "Supposing India becomes a free country tomorrow, all the capitalists will have an opportunity of becoming statutory trustees. But such a statute will not be imposed from above. It will have to come from below".

However persuasively one tries to present the India version of the British concept of trusteeship, it still remains alien to Indian thought. Throughout the centuries from pre-Vedic times, natural resources have been considered as owned by the people and not by their ‘trustees’ whose aims do not necessarily coincide with that of the people.

But today, the Indian state acts as the "guardian and trustee" of the natural resources of India, which practically means the handing over India’s oil and gas wells to multinationals such as Reliance and Shell. Even while it auctions spectrum to a few big multinationals like Bharti, Vodafone, Reliance, Tatas and Birlas, it claims that it is acting "in consonance with the principles of equality and public trust"! it is under the aegis of this trustee, that the coal and iron ore mines are being looted by ruthless mafias protected by the political parties of the rich.

In the colonial period, the colonial state usurped all rights of the people over land, forests and other natural resources. The British colonialists set up the Indian Forest Service in 1864 and formulated the Indian Forest Act in 1865, which declared that all "reserved" and "protected" forests belong to the colonial state. Using the principle of power of eminent domain and the Land Acquisition Act of 1894, the colonial state usurped the right of people to decide on the usage of land and exploit minerals buried under the land. After the colonialists left, the government of independent India endorsed the colonial concept of eminent domain power. The new Indian state accepted the colonial principles of jurisprudence that made the power of eminent domain, and the nature of ‘public purpose’, a matter solely for executive determination and statement, and, therefore, non-justiciable.

The Supreme Court judgment that the state is the proprietor of natural resources and should act as a trustee in deciding their use has to be vigorously contested. This is an archaic definition of the vesting of sovereignty and the ownership of natural resources. We need to initiate a popular debate on this issue to arrive at a modern definition that is consistent with the times.

 It would not be possible to discuss the Gandhian notion of trusteeship in detail here but the quote below brings out the essence of trusteeship.
 

"Trusteeship provides a means of transforming the present capitalist order of society into an egalitarian one. It gives no quarter to capitalism, but gives the present owning class a chance of reforming itself. It is based on the faith that human nature is never beyond redemption. It does not recognize any right of private ownership of property except so far as it may be permitted by society for its own welfare. It does not exclude legislative regulation of the ownership and use of wealth. Thus under State-regulated trusteeship, an individual will not be free to hold or use his wealth for selfish satisfaction or in disregard of the interests of society".

However persuasively one tries to present the India version of the British concept of trusteeship, it still remains alien to Indian thought. Throughout the centuries from pre-Vedic times, natural resources have been considered as owned by the people and not by their ‘trustees’ whose aims do not necessarily coincide with that of the people.

But today, the Indian state acts as the "guardian and trustee" of the natural resources of India, which practically means the handing over India’s oil and gas wells to multinationals such as Reliance and Shell. Even while it auctions spectrum to a few big multinationals like Bharti, Vodafone, Reliance, Tatas and Birlas, it claims that it is acting "in consonance with the principles of equality and public trust"! it is under the aegis of this trustee, that the coal and iron ore mines are being looted by ruthless mafias protected by the political parties of the rich.

In the colonial period, the colonial state usurped all rights of the people over land, forests and other natural resources. The British colonialists set up the Indian Forest Service in 1864 and formulated the Indian Forest Act in 1865, which declared that all "reserved" and "protected" forests belong to the colonial state. Using the principle of power of eminent domain and the Land Acquisition Act of 1894, the colonial state usurped the right of people to decide on the usage of land and exploit minerals buried under the land. After the colonialists left, the government of independent India endorsed the colonial concept of eminent domain power. The new Indian state accepted the colonial principles of jurisprudence that made the power of eminent domain, and the nature of ‘public purpose’, a matter solely for executive determination and statement, and, therefore, non-justiciable.

The Supreme Court judgment that the state is the proprietor of natural resources and should act as a trustee in deciding their use has to be vigorously contested. This is an archaic definition of the vesting of sovereignty and the ownership of natural resources. We need to initiate a popular debate on this issue to arrive at a modern definition that is consistent with the times. 

Posted In: Economy    Rights    Political Process    Supreme Court    2G scam    public trust doctrine    common good    trusteeship    Edmund Burke    mahatma gandhi    Indian Forest Act   

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