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The Supreme Court verdict puts to rest all doubts of domestic as well as international investors across sectors – infrastructure, mining among others – regarding allocation of natural resources.
Coal Minister Sriprakash Jaiswal, too, said that his Ministry would keep in mind the judgment while going for coal block allocations.
“The Supreme Court has correctly said that auctioning should not only target revenue maximisation. The Government is always of the view that natural resources should be given out in a way that helps the common man,” he said.
Not one to miss an opportunity, Jaiswal said, “That is why coal blocks were given to meet the increasing demand of coal leading to development of the country.”
Coming from a sector which has an established auctioning mechanism, the former Chairman of ONGC R.S. Sharma said: “As the Chairman of FICCI hydrocarbon committee, we had advocated a similar view. The auction route cannot be made for all natural resources. It will vary on a case-to-case basis for infrastructure and mining sectors.”
He said, “As regards the hydrocarbon sector, the New Exploration Licensing Policy (NELP) is good, but Open Acreage Licensing Policy (OALP) is a step further. But, what is more important is maintaining transparency in the entire allocation process.”
Pallavi Shroff, Senior Partner, Amarchand Mangaldas, said, “Insofar as resources such as coal, oil and gas, etc, are concerned, the Court has opined that the executive/legislature is at liberty to frame or maintain economic policies for their allocation/distribution. The only rider being that the policy adopted, must sub-serve ‘common good’, and should be fair, non discriminatory, non-arbitrary and non-capricious.”
Mukesh Butani, Chairman, BMR Advisors, was of the view that legislators may shy away from nomination basis as an avenue to allocate natural resources.
“In other words, though the Court has said that auction need not be the preferred route for natural resources, I anticipate that the legislature will strengthen governance in this area to avoid the situation that it has found itself in with respect to 2G spectrum. This is a welcome verdict and clarifies the primacy of legislature,” he added.
Alok Perti, advisor to the Coal Ministry, said that “Of course, auction is one of the ways. But, whether this is the best option, we cannot say unless we go through the process.”
“Auction gives a process to eliminate multiple applications and choose the company that suits the bidder qualifications…In case of captive coal blocks, it is tough to determine which company would set up the best end-use plant,” he said.
Ramesh Vaidyanathan, Partner, Advaya Legal, said: “This development is neither an endorsement of the Government stand nor an indictment of the CAG’s loss assessments. In the 2G and coal scams, the controversy is more over abuse of process rather than the choice of process. “Similarly, the CAG’s assessment was essentially aimed at highlighting the abuse of the process in the two cases.”
The Federation of Indian Mineral Industries, the apex body of non-coal mineral sector, which had intervened in the case, had opposed the auction process for grant of mineral concessions.
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