Clever FM has tried to
misinterpret the opinion given by Apex Court on sale of natural
resources. Valued opinion given by Apex court actually means to say that the
natural resources may be used for social welfare scheme without even opting for
auction process.It will be foolish to say that supreme court has indirectly
Court has not given the ruling that the natural resources can be allotted by leaders of ruling parties as per whims and fancies and that too , to the kith and kin of politicians and top ranked officials.
I would like to add
here that if possible government should mine coal and sell at ‘NO Profit NO
Loss ‘ so that input cost is minimum for all industries so far cost of natural
resources are concerned..It will to a great extent help in containing prices of
several commodities.
If a steel industry
has to pay cost of iron ore , coal and other required minerals at minimum possible price , they will be in a
position to sell the product at reasonable price . But for this government has
to ensure that these industries sell the goods at prices fixed by the government.
Supreme Court has
therefore told that it is not necessary to auction all mineral all the time.
Before the reformation era launched in 1991, government used to mine coal and
other natural resources and actual beneficiary was also the government and
hence prices used to remain within control. But in the name of reformation
government has started distributing all natural resources to private companies,
especially to kith and kin of ministers, politicians and top ranked officials
and they in turn are selling the same directly or indirectly at exorbitant
prices to others.
Due to this, price of
all essential goods have gone up manifold during the rule of UPA government led
by cleaver Manmohan Singh. This government has enough funds to give subsidy,
interest relief and tax concessions for years together to corporate but do not
have fund to subsidise cost of indane gas which is of mass use, of common men
essential need. Corporate has many option to manipulate their balance sheet in
such a way that their tax burden is nil or negligible even though they earn
profit of hundreds of crores of rupees per year.But common men cannot find any way of saving tax.Banks also give tax concession to corporate , never to common men.
It will therefore
be fraudulent attempt, mischievous effort and malicious intention of FM if he
means to draw conclusion that natural resources like coal or iron may be
distributed to private and government companies at lower rate and then
permitting private companies to sell the final product at rate much higher than
the rate at which companies under government sector is selling.
FM is trying to give
benefit of reformation largely to private companies without ensuring and
forcing companies to fix rate for the product in a justified manner to prevent
price rise. Coal is given to NTPC which sells electricity at Rs.1.00 per unit.
It is astonishing and painful that the same coal is given at same price to
reliance or other private companies who sell the electric power at Rs. 6 to
Rs.8.00 per unit.
Obviously FM is allowing private companies to extract blood from common men and indirectly permitting them to accumulate billions of rupees as profit. They may bribe crores of rupees to political leaders and government officials here and there and also contribute more and more to party fund as a token of award to politicians.
Similarly iron ore is given free to politicians who in turn sell them at much higher price after some value addition and earn thousands of crores of rupees in a year or two. Cost of iron rod used as building material has during last one decade has gone up from Rs.10000 per MT to Rs. 50000 per MT.
Obviously FM is allowing private companies to extract blood from common men and indirectly permitting them to accumulate billions of rupees as profit. They may bribe crores of rupees to political leaders and government officials here and there and also contribute more and more to party fund as a token of award to politicians.
Similarly iron ore is given free to politicians who in turn sell them at much higher price after some value addition and earn thousands of crores of rupees in a year or two. Cost of iron rod used as building material has during last one decade has gone up from Rs.10000 per MT to Rs. 50000 per MT.
There is no doubt that
misuse of natural resources by clever politicians like Chidambaram has only
resulted in so many scams and so many cases of corruption which are surfacing
one after other. It is disheartening that cleaver Finance Minister and the
government are trying to mislead the country by twisting the essence of the
observation given by learned Chief Justice of Supreme Court .
CAG should take note of Supreme Court ruling: Government
collected from Economic Times
NEW DELHI: Armed with the Supreme Court observation, the Government today said constitutional authorities like the Comptroller and Auditor General(CAG) should take note of the ruling that auction is not the only method for allocating natural resources.
"I sincerely hope that all constitutional authorities in future will bear in mind (the observations of apex court) while discharging their constitutional functions", Finance Minister P Chidambaram said here, while explaining the importance of ruling along with Telecom Minister Kapil Sibal and Law Minister Salman Khurshid.
Chidambaram said this in response to a question whether the Supreme Court's opinion on Presidential reference vindicated the stand of the government on 2G and coal blocks allocation controversy. The CAG in its reports had observed that faulty allocation of spectrum and coal blocks had cost a big loss to the exchequer.
Giving its opinion on the Presidential reference arising out of 2G verdict, a five-judge constitution bench of the apex court yesterday held that auction was not the only method for allocating natural resources to private companies.
The court observed that common good was the touchstone for any policy and any means adopted to achieve the objective was in accordance with the constitutional principles.
"The implied benchmark against which loss or presumptive loss was judged (by CAG) was auction...the Supreme Court says that auction is not a constitutional mandate for disposing of natural resources...I think in a way all of us are in a learning process", Chidambaram said.
As regards the irregularities in implementation of the policies, he said, "we have maintained... that if there were any irregularities or illegalities in implementation of any policy, those must be corrected and those responsible be held to account".
In reporting and in commenting on the landmark Supreme Court’s advisory opinion on the Presidential reference in relation to the 2G spectrum, papers and commentators have selectively picked on the parts of the advisory that suit their pet positions on the subject.
Government spokesmen have hailed the opinion as vindicating the government’s position. The truth is more complex. By holding that, ‘Auction, despite being a more preferable method of alienation/allotment, cannot be held to be a constitutional requirement or limitation for alienation of all natural resources and therefore every method other than auction cannot be struck down as ultra vires the constitutional mandate,’ the Court has not endorsed either auction or executive discretion..
Indeed by observing that auction is a more ‘preferable method’ the Court could, arguably, be regarded as leaning towards the auction route; though by prefacing the phrase with the word ‘despite’, the observation takes on a different and more nuanced colour.
Sure, the Court has made it clear the executive has the right to take policy decisions. But that right comes with a rider. The right has to be exercised for public, not private, good. Most important of all, if the government falls short on this count, the Court has the right to intervene. Seen in that light, the government might not have much to celebrate! Citizens, do!
http://blogs.economictimes.indiatimes.com/myth-n-reality/entry/govt-might-not-have-much-to-celebrate
Profits not inimical to society, but maximising state revenue could be
collected from Economic Times
"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 maximise revenue may be arbitrary and face the wrath of Article 14 of the Constitution." That is a vital part of the Supreme Court's response to the President's reference on 2G. A disjunction between social welfare and the pursuit of profits by private entrepreneurs is implicit in the judges' mind. But is this valid?
The vast majority of jobs in any economy are in enterprises created by private entrepreneurs in their zeal to create profits. Every product that offers daily utility, soap or sugar or paper, or aesthetic enjoyment, music or a book, results from someone's desire to generate profits. William Shockley and his team developed the modern transistor at Bell Labs, a private enterprise undertaking wide-ranging research with the objective of converting new knowledge into products and processes that would generate profits. Pharmaceutical research that produces wondrous cures and marvellous clinical investigation techniques have all come out of someone's pursuit of profits. The notion that profit is a dirty word and antithetical to social welfare is a relic of an ideology that India needs to abandon.
Should the government maximise revenue from the sale of the natural resource in question or from the consequent use of the natural resource?
Should a piece of land be sold to an amusement park operator offering a higher price as compared to a power producer, the electricity who generates would run many enterprises, create profits, salaries and wages - all of which would yield revenue for the government over time?
Revenue is also contextual and cannot be decided by a-priori rules. The court should leave such questions firmly to the executive.
http://economictimes.indiatimes.com/opinion/editorial/profits-not-inimical-to-society-but-maximising-state-revenue-could-be/articleshow/16598064.cms
Some clarity and some confusion from the Supreme Court
The Supreme Court has removed the shackles on policymaking introduced by the February 2012 judgment that ruled that the only permissible way to allocate natural resources was through auctions while cancelling 122 telecom licences. The response of the Court, its Opinion, to a reference from the President on the subject makes three things clear.
One, there is no special sanctity to any particular method, such as auctions, in allocating natural resources, and any method can be adopted so long as advancing the common good in a fair and transparent fashion is the primary objective . Two, policymaking is the legitimate domain of the government. And three, policy and state action that are arbitrary and mala fide will be struck down by the courts.
While making this presidential reference, the government had made it clear that it is not challenging the 2G judgment. But what the Court has now clarified has significant bearing on the February judgment. While the government has no room to build on the implications of the present Opinion of a five-member bench, including the Chief Justice of India, for the February judgment by a two-member bench, private parties can indeed seek to do so.
There is no bar on any method of allocating natural resources, so long as the objective is to advance the common good, the Court has clarified. The Opinion cites a previous judgment of the court to illustrate how even a negotiated allocation of natural resources to one particular party is perfectly kosher. Suppose a state government wants to attract investment to its territory and manages to convince some investor to start a new project in a backward region and gives the project land, a scarce natural resource, for free, as part of a package of incentives to attract the investment. There is no question, says the Court, of this falling foul of the constitutional mandate of equality or any other provision of law. Any way of allocating natural resources is fine, so long as the objective is advancing the public good and no unfairness and discrimination are involved. And it is the government’s prerogative to formulate policy. And particularly in economic matters, the government requires a great deal of latitude to take decisions, and no pre-set rules can apply. Only the objective of advancing the common good and the principles of fairness, reasonableness and transparency matter, not some notion that only auctions are permissible.
What this means is that there is nothing wrong with the policy of first-come-first-served. This opens the way for private parties to seek judicial redress. They cannot seek to annul cancellation of the 122 licences, since the manner in which they were granted clearly showed arbitrariness and mala fide. However, it is open for private parties to question the validity of the February 2012 order to issue fresh licences only through an auction. This is an instance of the Court formulating policy, stepping into the domain of the government. Logically, they can also argue that since a policy of first-come-first-served is also valid, the right way to issue licences in lieu of the cancelled licences is to re-process, in a fair fashion, the applications pending at the time when the A Raja dispensation processed them to turn the priority list topy-turvy.
The Opinion brings security to the licences issued prior to 2008. The clear implication is that the policy of first-come-first-served that had been followed in granting telecom licences after 2001 (in 2001, auctions had been conducted) is fine.
There is no legal issue with the beauty parade that was used to identify operators to be licensed in 1994. The auctions that took place in 1995, to identify licensees on the basis of how large a licence fee they would pay, and were subsequently undermined in 1999 by migrating all licensees to a revenue sharing platform, sparing them the need to pay the huge licence fees they had bid to displace rivals and obtain licences, are all constitutionally valid. This applies the regularisation, in 2003, of Reliance’s backdoor entry into mobile telephony, as also Tata’s. The licences issued prior to those 122 licences issued on January 10, 2008 are all valid.
Some commentators are making much of the following observation in the Court’s Opinion. “Alienation of natural resources is a policy decision, and the means adopted for the same are thus, executive prerogatives. However, 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 maximizing 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.”
Two observations would be appropriate. One is the apparent disjunction in the Court’s mind between commercial pursuits of profit-maximising entrepreneurs and social and welfare purposes. In a modern capitalist economy, the profit-maximising zeal of private entrepreneurs drives them to start new ventures, create new jobs and incomes, innovate new technologies and products, produce new services all of which together greatly enhance living standards and social welfare. Facilitating a private enterprise by offering natural resources would enhance social welfare. So, whether an entrepreneur makes money out of allocation of natural resources cannot be the only test for the method of allocating that natural resource. It depends on the specific purpose for which the natural resource is being allocated.
The second point is the concept of maximising revenue. Here, it is important to take a holistic view about the sources of revenue at stake in the allocation of resources and the time horizon over which revenues are to be maximised. Consider a parcel of land to be sold, either for constructing a power plant or for building an amusement park. Suppose the builder of the amusement park is willing to pay a higher price for the land than what the power plant builder offers. Should the government sell the land to the amusement park project because it would fetch it a higher revenue from that transaction? Or should it consider the incomes that would be generated out of the economic activity enabled by the electricity generated by the proposed power plant? Should the tax collections from such yet-to-be actualised economic activity enter into the government’s consideration of revenue maximisation?
Suppose a third bidder seeks the land to build a for-profit hospital. It offers a price lower than what the amusement park builder is willing to pay but higher than what the power producer offers. Suppose the hospital would generate profits on par with the amusement park and tax collections from either activity would be the same. But the hospital would additionally provide healthcare to a large population in the hinterland. Should revenue maximisation from sale of an asset the government holds in public trust and tax earnings over time be the only consideration that guides the government?
In some cases, it could well be the case that price of the natural asset being alienated gets configured in the price of the end-product, for which the natural asset is an input, in a manner that is visible only to a financial analyst. Consider a toll-road project financed by the builder being given land to construct a townships. The construction of the road and the township entails a certain outlay. For exactly the same return on his outlay, the project developer would be able to offer different levels of toll, depending on how much he has to pay for the land. If the government’s goal is to minimise the toll, it could give the land to the developer at no cost.
If this project is bid out to the person who offers the lowest toll, that bidder would also still have a particular return on his equity, but he would have the maximum execution capability and the best ability to optimise resource use to complete the project. The CAG could later criticise the government for giving the land away for free, but that would only reflect the financial illiteracy of the CAG. If the land bears a price, with the same execution capability and the same return on equity, the toll would be higher, defeating the goal of keeping the toll low.
The short point is that the concept of maximising revenue is far from straightforward when it comes to allocating natural resources. Fairness, transparency and advancing the common good are what matters, not immediate revenue mobilised from the transaction. Ascending auctions that maximise revenue from the particular transaction could well prove to be a bane, generating ‘the winner’s curse’ and misallocating scarce investible resources.
This is particularly true in the case of spectrum for telecom, which has huge externalities and raising the cost of spectrum in pursuit of immediate revenue could endanger the larger societal benefits and government revenue that accrue from fast spread of high-speed data access.
Profits not inimical to society, but maximising state revenue could be
collected from Economic Times
"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 maximise revenue may be arbitrary and face the wrath of Article 14 of the Constitution." That is a vital part of the Supreme Court's response to the President's reference on 2G. A disjunction between social welfare and the pursuit of profits by private entrepreneurs is implicit in the judges' mind. But is this valid?
The vast majority of jobs in any economy are in enterprises created by private entrepreneurs in their zeal to create profits. Every product that offers daily utility, soap or sugar or paper, or aesthetic enjoyment, music or a book, results from someone's desire to generate profits. William Shockley and his team developed the modern transistor at Bell Labs, a private enterprise undertaking wide-ranging research with the objective of converting new knowledge into products and processes that would generate profits. Pharmaceutical research that produces wondrous cures and marvellous clinical investigation techniques have all come out of someone's pursuit of profits. The notion that profit is a dirty word and antithetical to social welfare is a relic of an ideology that India needs to abandon.
Should the government maximise revenue from the sale of the natural resource in question or from the consequent use of the natural resource?
Should a piece of land be sold to an amusement park operator offering a higher price as compared to a power producer, the electricity who generates would run many enterprises, create profits, salaries and wages - all of which would yield revenue for the government over time?
Revenue is also contextual and cannot be decided by a-priori rules. The court should leave such questions firmly to the executive.
http://economictimes.indiatimes.com/opinion/editorial/profits-not-inimical-to-society-but-maximising-state-revenue-could-be/articleshow/16598064.cms
Some clarity and some confusion from the Supreme Court
The Supreme Court has removed the shackles on policymaking introduced by the February 2012 judgment that ruled that the only permissible way to allocate natural resources was through auctions while cancelling 122 telecom licences. The response of the Court, its Opinion, to a reference from the President on the subject makes three things clear.
One, there is no special sanctity to any particular method, such as auctions, in allocating natural resources, and any method can be adopted so long as advancing the common good in a fair and transparent fashion is the primary objective . Two, policymaking is the legitimate domain of the government. And three, policy and state action that are arbitrary and mala fide will be struck down by the courts.
While making this presidential reference, the government had made it clear that it is not challenging the 2G judgment. But what the Court has now clarified has significant bearing on the February judgment. While the government has no room to build on the implications of the present Opinion of a five-member bench, including the Chief Justice of India, for the February judgment by a two-member bench, private parties can indeed seek to do so.
There is no bar on any method of allocating natural resources, so long as the objective is to advance the common good, the Court has clarified. The Opinion cites a previous judgment of the court to illustrate how even a negotiated allocation of natural resources to one particular party is perfectly kosher. Suppose a state government wants to attract investment to its territory and manages to convince some investor to start a new project in a backward region and gives the project land, a scarce natural resource, for free, as part of a package of incentives to attract the investment. There is no question, says the Court, of this falling foul of the constitutional mandate of equality or any other provision of law. Any way of allocating natural resources is fine, so long as the objective is advancing the public good and no unfairness and discrimination are involved. And it is the government’s prerogative to formulate policy. And particularly in economic matters, the government requires a great deal of latitude to take decisions, and no pre-set rules can apply. Only the objective of advancing the common good and the principles of fairness, reasonableness and transparency matter, not some notion that only auctions are permissible.
What this means is that there is nothing wrong with the policy of first-come-first-served. This opens the way for private parties to seek judicial redress. They cannot seek to annul cancellation of the 122 licences, since the manner in which they were granted clearly showed arbitrariness and mala fide. However, it is open for private parties to question the validity of the February 2012 order to issue fresh licences only through an auction. This is an instance of the Court formulating policy, stepping into the domain of the government. Logically, they can also argue that since a policy of first-come-first-served is also valid, the right way to issue licences in lieu of the cancelled licences is to re-process, in a fair fashion, the applications pending at the time when the A Raja dispensation processed them to turn the priority list topy-turvy.
The Opinion brings security to the licences issued prior to 2008. The clear implication is that the policy of first-come-first-served that had been followed in granting telecom licences after 2001 (in 2001, auctions had been conducted) is fine.
There is no legal issue with the beauty parade that was used to identify operators to be licensed in 1994. The auctions that took place in 1995, to identify licensees on the basis of how large a licence fee they would pay, and were subsequently undermined in 1999 by migrating all licensees to a revenue sharing platform, sparing them the need to pay the huge licence fees they had bid to displace rivals and obtain licences, are all constitutionally valid. This applies the regularisation, in 2003, of Reliance’s backdoor entry into mobile telephony, as also Tata’s. The licences issued prior to those 122 licences issued on January 10, 2008 are all valid.
Some commentators are making much of the following observation in the Court’s Opinion. “Alienation of natural resources is a policy decision, and the means adopted for the same are thus, executive prerogatives. However, 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 maximizing 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.”
Two observations would be appropriate. One is the apparent disjunction in the Court’s mind between commercial pursuits of profit-maximising entrepreneurs and social and welfare purposes. In a modern capitalist economy, the profit-maximising zeal of private entrepreneurs drives them to start new ventures, create new jobs and incomes, innovate new technologies and products, produce new services all of which together greatly enhance living standards and social welfare. Facilitating a private enterprise by offering natural resources would enhance social welfare. So, whether an entrepreneur makes money out of allocation of natural resources cannot be the only test for the method of allocating that natural resource. It depends on the specific purpose for which the natural resource is being allocated.
The second point is the concept of maximising revenue. Here, it is important to take a holistic view about the sources of revenue at stake in the allocation of resources and the time horizon over which revenues are to be maximised. Consider a parcel of land to be sold, either for constructing a power plant or for building an amusement park. Suppose the builder of the amusement park is willing to pay a higher price for the land than what the power plant builder offers. Should the government sell the land to the amusement park project because it would fetch it a higher revenue from that transaction? Or should it consider the incomes that would be generated out of the economic activity enabled by the electricity generated by the proposed power plant? Should the tax collections from such yet-to-be actualised economic activity enter into the government’s consideration of revenue maximisation?
Suppose a third bidder seeks the land to build a for-profit hospital. It offers a price lower than what the amusement park builder is willing to pay but higher than what the power producer offers. Suppose the hospital would generate profits on par with the amusement park and tax collections from either activity would be the same. But the hospital would additionally provide healthcare to a large population in the hinterland. Should revenue maximisation from sale of an asset the government holds in public trust and tax earnings over time be the only consideration that guides the government?
In some cases, it could well be the case that price of the natural asset being alienated gets configured in the price of the end-product, for which the natural asset is an input, in a manner that is visible only to a financial analyst. Consider a toll-road project financed by the builder being given land to construct a townships. The construction of the road and the township entails a certain outlay. For exactly the same return on his outlay, the project developer would be able to offer different levels of toll, depending on how much he has to pay for the land. If the government’s goal is to minimise the toll, it could give the land to the developer at no cost.
If this project is bid out to the person who offers the lowest toll, that bidder would also still have a particular return on his equity, but he would have the maximum execution capability and the best ability to optimise resource use to complete the project. The CAG could later criticise the government for giving the land away for free, but that would only reflect the financial illiteracy of the CAG. If the land bears a price, with the same execution capability and the same return on equity, the toll would be higher, defeating the goal of keeping the toll low.
The short point is that the concept of maximising revenue is far from straightforward when it comes to allocating natural resources. Fairness, transparency and advancing the common good are what matters, not immediate revenue mobilised from the transaction. Ascending auctions that maximise revenue from the particular transaction could well prove to be a bane, generating ‘the winner’s curse’ and misallocating scarce investible resources.
This is particularly true in the case of spectrum for telecom, which has huge externalities and raising the cost of spectrum in pursuit of immediate revenue could endanger the larger societal benefits and government revenue that accrue from fast spread of high-speed data access.
Manmohan Singh serves Rs 8000 plate on UPA2 anniversary party
Whereas the planning commission has defined poverty line of Rs 32 per capita for urban areas and Rs 26 per capita for rural areas, the UPA government exceeded the reasonable amount to host a dinner party on the completion of three years of its second term.
You might have come across many instances of extravaganza in government offices. But it is unbelievable that a plate in a dinner party hosted by the government can cost Rs 8000. Surprised? But you read it correct.
The gala dinner party hosted by the Prime Minister Manmohan Singh on the completion of UPA2’s third year was the height of wastefulness.
The cost of one plate in the dinner party organized at Prime Minister’s 7 Race Course Road on May 22, 2012 stood at Rs 7,721.
The shocking revelation was made through a RTI report filed by one Ramesh Verma.
According to the RTI reply, the total expense on catering in the dinner party was Rs 11, 34, 296 while government threw away Rs 14, 42, 678 on the arrangements of tent. Expenditure on the flower decoration in the party was Rs 26, 444.
That means, the total expenditure of Prime Minister’s dinner party was Rs 28, 95, 503. A total 603 people were invited for the UPA2’s third anniversary celebration but just 375 could manag to attend it.
The Prime Minister's Office was the charge of hospitality arrangements and the payment of PMO’s dinner was made by the CPWD and Foreign Ministry under hospitality grant.
However, the government’s policy-maker wing, the Planning Commission, has defined the poverty of Rs 32 per capita for urban areas and Rs 26 per capita for rural areas. But Manmohan-led UPA government burnt lakhs of public money to host a gala dinner for the anniversary celebration.
Recently, the prime minister said that money does not grow on trees and government would have to take tough steps to strengthen country’s economy. But on the other hand, lakhs of public money was drained away by Prime Minister’s office.
Government always talks about austerity drive and also planning to bring a bill to curb the huge expenses in marriage parties, but such a huge expenditure over a dinner party leaves several question unanswered.
Liberalisation is misinterpreted by the so called political leaders - be it UPA or NDA. Both have their share of scams in the name of liberalisation. NDA handed over profit making public sector companies to private parties and now in the name of liberalisation UPA is handing over valuable mineral resources to private sector. It is unfortunate that both are fooling the public and putting the Indian economy at grave risk. I recently heard a gossip in some political circles that Railways want to give on lease the excess railway land to private parties to set up solar power stations along its tracks to supply power to Indian Railways. When I heard about this I felt happy that some sense has entered the heads of the policy makers. But the very next moment I was stunned when the talk came around that the private sector has to dole out 1400 crores of Rupees as donation to political parties. I can not say about the authenticity of the discussion by the small time politicians, but if it is true then I would rather say that these politicians are ruining our economy for their greed for money & power.
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