Acts of Parliament to set natural resource policies

Written by Nistula Hebbar | Nistula Hebbar | Rishi Raj | New Delhi | Updated: Apr 28 2011, 07:29am hrs
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Rattled by a series of scams, the Union government wants to switch to transparent policy-making in critical areas involving allocation of natural resources. The idea is to pass all policies in sectors like telecom, power and oil through Acts of Parliament to ensure the highest standards of transparency. The move will also curb the tendency among certain ministers to treat areas within their ministries as their fiefdom and avoid any inter-ministerial discussions.

Sources said the national telecom policy (NTP) 2011 being finetuned by the department of telecommunications will be the first of this kind to be passed by the Parliament before becoming an Act. Telecom minister Kapil Sibal has already set up a group headed by retired justice Shivraj Patil to draft a National Spectrum Act, which will be part of NTP. Policies related to allocation of other natural resources like power and oil too will be passed in Parliament.

Government sources said policies passed by an Act of Parliament would ensure stability in policies and reduce regulatory risks, two major concerns among foreign investors. Officials said the proposal to move major policies through Parliament rather than the Cabinet or empowered groups of ministers came after realising the damage from the arbitrary allocation of telecom licences and spectrum in January 2008. Resorting to Cabinet decisions could also be risky, since the ruling UPA itself had sought to find holes in the first-come-first-served (FCFS) policy of allocating spectrum formalised by the previous NDA government.

In mining, the whole policy is governed by the MMDR Act. It reduces the chances of large-scale corruption by any individual minister. Most importantly, there can be no political charges.

Theres a flip side too: Once policies are passed as Acts of Parliament, making subsequent changes is cumbersome because one has to go back to Parliament for the changes, which is time-consuming and needs broad political consensus, an official involved in the discussion process said.

There are benefits as well, the official said: The discretion exercised by individual ministers while allocating raw material sources to their preferred parties by tweaking processes will disappear. For instance, had the existing telecom policy been an Act of Parliament, it would not have been possible for former telecom minister A Raja to tweak the FCFS policy to enable applicants who paid first to get spectrum first. He could not have overruled suggestions by the law ministry, finance ministry or the Prime Ministers Office to auction spectrum.

Though the government has successfully experimented with the EGoM model for 3G spectrum auctions and contentious issues in several other areas, the minus point is that EGoM decisions do not lay down a long-term road map. For instance, theres no policy that each time spectrum is allocated or a mining lease is allocated, there will be an auction, leaving enough discretion for ministers to tweak policies. Policies passed through Acts of Parliament also survive changes in government, an official said, adding that at least, it would bring stability in policy for a minimum of five years.