After the Comptroller and Auditor General’s report on the 2G spectrum sc­am comes the la­ndmark Singhvi-Ganguly judgment of the Supreme Court, cancelling all the 122 licences issued to telecommunications companies in 2008, and ordering an auction. The licences were the end product of an illegitimate and corrupt process begun in the early 2000s, wh­ich the Supreme Court held, runs against public interest and is “violative of constitutional principles”.

The United Progressive Alliance (UPA) is wrong and disingenuous to say the verdict exonerates home minister P Chidambaram and has no policy implications. But, the judgment didn’t delve into individual responsibility and limited itself to examining the effects of the first-come-first-served (FC­FS) licensing approach and sudden changes in the rules set for granting licences. The issue of prosecuting Chidambaram for his complicity as former finance minister in the underpricing of licences was referred to a special court. Its refusal to sanction prosecution may not be the final word on the matter.

The Supreme Court judgment is a scathing indictment of prime minister Manmohan Singh’s government for its culpability under the settled principle of collective responsibility of the cabinet. A fact highlighted in the judgment was that telecom minister A Raja disregarded Singh and Chida­mbaram’s advice doesn’t absolve the government. It only raises the question as to why Singh let him continue in the cabinet despite his defiance. In a cabinet system of government, the prime minister has the last word.

The BJP should not relish UPA’s embarrassment. The judgment implies that it too was reprehensible. In fact, it pioneered the FCFS approach to licensing the use of scarce resources like electromagnetic spectrum. Its government also fiddled with and corrupted the licensing process while its ministers made millions.

The judgment is significant for five reasons. First, it says the state holds the nation’s natural resources in trust and casts a special duty on it of allocating them to private enterprises in a fair and transparent manner. Besides airwaves, such scarce common resources include land, minerals, including coal, iron and manganese ore, oil and gas, forests, coastlands, water and air, among others. The court oversimplifies issues by recommending auctions as a more or less universally applicable method of determining the right price irrespective of purpose. Auctions only work where there are developed and mature markets, which don’t exist in land or water. Auctions are unsuitable in allocating public land to, say, hospitals, schools or low-budget housing.

Nevertheless, the public trust doctrine has been established. This means that licences issued on the basis of FCFS or influence peddling and bribery in other sectors can be opened up for scrutiny. That would cover hundreds of extractive industry licences, wh­ere unscrupulous and pr­edatory interests have appropriated public property for a pittance. Examples are projects in which long-term coal mining rights were recklessly granted to power companies and Reliance Industries’ Krishna-Godavari gas project. RIL first argued that KG gas represents national wealth and, hence, the Union government’s sovereign decision on its pricing must take precedence over its own “private” agreement with the Anil Ambani group on fixing the price. Now, RIL wants to have a say in fixing the price. This won’t do.

Second, the judgment re­cognises the citizen’s right to file corruption complaints and, thus, returns public interest litigation to the high status it once rightly enjoyed. Here, the verdict stands in contrast to the apex court’s dismissal of a petition by the Union government for Indian trade unions in the Enron case a decade ago. Th­ird, however, the judgment does not go into the issue of why the UPA government continued to defend the 2G spectrum allocation and deny that it caused a loss to the exchequer — long after the CAG’s excellent report, which estimated the loss at between Rs 56,000 crore and Rs 1,76,000 crore. Nor does the judgment systematically penalise the companies that manipulated the process. It only spells out a “costs award” without specifying its basis. It also doesn’t quash the pre-2008 FCFS licences, as would be logical.

Fourth, the judgment treads on some tricky ground on judicial review. It rejects the argument that judicial review in commercial and fiscal matters must be limited — in favour of “the larger public interest”. But, it does not say how this public interest should be determined beyond the concerned judge’s perception. Unless rigorous criteria are laid down, this could lead to judicial hyper-activism. Yet, it’s undeniable that the judges were remarkably restrained and didn’t allow themselves to be overwhelmed by the political upheavals that accompanied the scam’s unfolding.

Finally, the verdict reprimands the Telecom Regulatory Authority of India for facilitating the 2G scam. Paradoxically, however, it nominates the same agency to work out the modalities of the fresh auctions.

On a broader perspective, the judgment underscores the pitfalls of neoliberal economic policies and warns of their huge potential for abuse. Neoliberalism is designed to bring about the expropriation of public resources and dispossess people of their access to the natural commons. Under it, capital will necessarily colonise more and more natural resources. This cannot be prevented by more transparent market-based mechanisms. The Great Recession shows this. Neoliberalism has proven to be bankrupt in its heartland. It won’t succeed elsewhere.

(The writer is an independent commentator on political and economic issues)