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Government keeps Chawla report, Mining Act review from Supreme Court-Shalini Singh

-The Hindu

Both documents extensively discuss need for competitive bidding for scarce natural resources

The fate of the Ashok Chawla Committee report on the allocation of natural resources suggests a wider government unwillingness to accept competitive bidding, auctions and market-linked pricing for scarce, natural resources lies at the heart of its 2G review petition.

The Committee was set up on January 31, 2011, at the peak of the 2G scam expose and just a few days before former Telecom Minister, A. Raja was arrested by the CBI for illegally allocating 2G spectrum on a first come, first served (FCFS) basis, causing a massive loss to the exchequer. The objective of the exercise was to help the government make allocation of natural resources more transparent.

The guiding thrust of the Chawla Committee's recommendations is the use of market-determined processes like auctions for allocation of all scarce natural resources with nuanced deviations in specific cases alone. Its contents have been extensively debated across multiple government ministries, with industry associations, businesses, economists and other experts, and even been accepted by the Group of Ministers headed by Pranab Mukherjee on October 15, 2011. its recommendations tie in closely with the Supreme Court's 2G licence cancellation order of February 2, 2012 which directed that all scarce, natural resources such as spectrum which are alienated for commercial reasons to private parties be allocated through a pre-publicised, fair, and transparent auction process. Despite this meeting of minds, the government has steadfastly refused to make the Chawla Committee's report public, while simultaneously challenging the Supreme Court's 2G judgement through the filing of a Review Petition and a Presidential Reference.

Additionally, in its 2G Review Petition, the government has relied extensively on Section 11 of the Mining and Minerals Development Regulation (MMDR) Act, 1957, which prescribes a ‘first in time' procedure to be followed for the allocation of mines in order to dislodge the Supreme Court's decision for auctions, without disclosing to the Court that this Act is itself under review for similar allegations of lack of transparency and resultant corruption.

The Chawla Committee Report reveals that the government's legal references and disclosures to the Supreme Court on the MMDR Act is not the whole truth, which could be an additional reason for the report gathering dust.

The Ministry of Mines has framed a new MMDR Bill 2011 to replace the old MMDR Act 1957 which has been referred to the GoM and vetted by the Law Ministry. The review was undertaken because: “The decision making process involved in the grant of concessions is perceived as non-transparent, inefficient, and subject to huge delays at all levels, resulting in poor investments in the sector, discontent in host populations for mining projects and illegal mining which is causing loss of revenue to State governments,” states the Chawla Committee report. Following this, a high level committee under the chairmanship of A Hoda, Member, Planning Commission, made recommendations for changes in the existing procedure. The narrative and deliberations in the Ashok Chawla report illustrate how for the mining sector, auctions have been actively discussed, accepted, included and then wilfully removed from various government drafts.

The politics against transparency is so severe that the Ministry of Mines refused to share the current version of the MMDR Bill 2011 even with the Chawla Committee, placing instead, a June 3, 2010 draft that was already available in the public domain.

The June 3, 2010 draft Bill discusses the allocation of reconnaissance licence (RL), prospecting licence (PL), and large area prospecting licence (LAPL). Since FCFS or ‘first in time' was being followed, the June 3, 2010 draft, Section 13(1)(b) did envisage replacing FCFS with bidding for LAPL. When brought up in the Committee, mining ministry officials clarified that “During discussions the current draft under consideration (which the mining ministry refuses to reveal publicly or even share with the Committee) has removed this aspect.”

Bidding as an option was discussed in all seriousness in the Mining Bill but was fiercely opposed by mining ministry officials on grounds that auctions “may sound the death knell of the industry”. This is despite the fact that several large mining companies that were consulted during the report have themselves actively sought ‘an auction mechanism' along the lines of the NELP policy.

The minutes of the meetings with officials of the Mining Ministry show that they opposed the very inclusion of mines in the Ashok Chawla Committee on the frivolous pretext that the Committee was only supposed to examine those natural resources which come under the direct control of the Central government, while mines fall under the jurisdiction of state governments. They further argued that an Empowered Group of Ministers headed by the Finance Minister was looking into the amendments of the MMDR Act, and that most of the issues raised in the Committee presentations were already under consideration. The chairman of the Committee, Mr. Ashok Chawla shot this down, pointing out that it would not encroach upon the areas of the EGoM and that it would be well within the mandate of the Committee to make generic recommendations.

High-level government sources admit, “the Ashok Chawla Report is stuck on account of stiff opposition to reform by certain ministries, who wish to retain their discretionary powers in the allocation of natural resources.” Since the Supreme Court's jurisdiction is pan-India, the government could have easily used the judgment to break down this resistance, but is instead, choosing to appeal the 2G judgment, by hiding and misrepresenting information about ongoing policy discussions.

The government may be hard-pressed to explain why it refused to disclose the fact that an amendment to the mining legislation is on the anvil while alleging that the Supreme Court's judgment violates the MMDR Act. Equally, why it opposes the Supreme Court's intervention in policy implementation but refuses to disclose the Chawla Committee's seminal work with regard to policy on the issue of allocating scarce natural resources.