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Saturday, 11 May 2013 00:00
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SC refuses to get into policy issues in Posco case


South Korean steel major Posco’s $12 billion steel plant may finally get to reach the starting line with the Supreme Court giving a verdict that is likely to help the 8 million tonne steel plant get rights to iron ore mines allocated to it by the Orissa government. On Friday, as the SC has done several times over the past few weeks, the court indicated that policy formation was the domain of the executive. And on Thursday, the SC ruled against the petition that challenged the Cairn-Vedanta deal on grounds the deal was harmful to the public interest; on May 1, it ruled against a petition which challenged the government decision to allow multi-brand retail on grounds it would hurt consumers and small shopkeepers. In the multi-brand retail case, the bench headed by Justice RM Lodha said “this court does not interfere in the policy matter unless the policy is unconstitutional, contrary to statutory provisions or arbitrary or irrational or there is total abuse of power”. In the Posco case, the Orissa government had recommended that the Centre allot an iron ore mining licence to Posco for 600 million tonnes of ore in the Khandadhar hills in Sundargarh. While Geomin Minerals had challenged the decision on grounds it had applied for a mining licence before Posco had, the Court has not ruled on this specific allegation. Instead, it has asked the Centre to consider all the objections raised by the parties and come up with a decision. So when coming to a decision, it is possible the Centre will weigh the advantages of allotting the mines to Posco—it comes with a $12 billion investment tagged on to it and will lead to both employment creation as well as overall development in the region.

Goemin and others may still feel free to contest the Centre’s decision if it indeed goes in Posco’s favour, but the point is that the state must have the right to discretionary use of its powers for the larger benefit of people—the reasons for why decisions are taken, of course, must be spelt out clearly. Indeed, that is an issue often overlooked by bodies like the CAG, for instance, when it recently said that the Orissa government had lost money when it gave Posco land at concessional rates. If states are to attract investment, and no one can deny they need to, they have to offer some facilities including, if need be, concessional land. The acquisition of land has picked up speed—1,700 acres of the 2,700 acres required has already been acquired—but Posco is still not out of the woods. A final nod from the environment ministry is still awaited. The last time around, it’s useful to keep in mind, the environment ministry even argued the project authorities had not taken into account the sensitivities of tribals—months later, the ministry admitted the Posco project area was not one where tribals were to be found. For now, however, the important thing is the SC has upheld the executive’s untrammelled right to make policy.


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