Privatization has to ‘go along’ with Constitution: SC

Madhavi Chopra, Guru Gobind Singh Indraprastha University

Privatization in generic terms refers to the process of transfer of ownership, can be of both permanent or long term lease  in nature, of a once upon a time state-owned or public owned property to individuals or groups that intend to utilize it  for private benefits and run the entity with the aim of profit maximization. In other words, it is a route from public or state ownership to private players or a group. From the other point of view, it is a strategy that provides advantages to a few at the price of many. However, this is always subjected to the circumstances involved.

A three judge bench headed by Justice AK Patnaik, hearing the Public Interest Litigation of NGO Goa foundation against illegal iron ore extraction in the state, referred to certain news reports which suggested adverse impact of its decision to halt mining on the economic growth.

The Supreme Court said that maybe new economic thought has developed but the privatization in our country has to go along with our Constitution.

The bench, also comprising justices Mr SS Nijjar and Mr FM Ibrahim, said that “We (judges) have taken oath to uphold this Constitution and not western economic model.”

The bench also observed that it has to consider Article 21 (right to life) and Part IV of the Constitution in deciding such pleas. The bench, which on October 5 last year had halted the mining operations in all the 90 mines in Goa, recently agreed to accord expeditious hearing to the petition after Sesa Goa, a Vedanta group firm and country’s largest producer and exporter of iron ore in the private sector, approached it.

Mining was halted considering the Justice Shah Commission report that had indicted almost all the miners saying the illegal extraction of iron ore during last 12 years had caused a loss of INR 35,000 crore to the state exchequer.

Now the question is whether desperate pleas to allow resumption of mining should be allowed?

One view is that upholding privatization policies will breach constitutional principles i.e.  Directive Principles chapter in Part IV of the Constitution which gives Article 39 providing for a slew of welfare principles, including “operation of the economic system does not result in the concentration of wealth and means of production to the common detriment”, as guiding principles for governance. They are fundamental to the governance of the country. It binds the state to apply these principles in law making.

Another view is seeing   GDP as basic structure of Constitution and not hampering the progress of economic development.  These activities are working intensely for economic policies and development and banning them will have severe impact on Goa’s economy.

Judgment copy available here