Monetisation and the rights of states
The Tamil Nadu government’s opposition to New Delhi’s mammoth asset monetisation programme has thrown the focus back on federalism in the country. Chief Minister M K Stalin says public sector units are assets of the people and serve as the taproots for small and marginal industries. He believes privatising or leasing them out would not augur well for the country’s welfare. Moving a step further, the TN industries minister said New Delhi should consult the state governments that have extended land for creating these assets. For example, Tamil Nadu has given a vast tract of land for establishing Salem Steel Plant.
The recently-announced Rs 6 lakh crore national monetisation pipeline has lined up several assets from Tamil Nadu, including four airports, a heritage train and key national highway stretches. Can the Centre go ahead unilaterally to privatise these assets without taking the states into confidence and adequately compensating them?
A year ago, the Centre’s airport privatisation plan had run into a similar roadblock. The Kerala government had moved the apex court to oppose the privatisation of Trivandrum International Airport, one of the six that Adani Enterprises won through an international bidding. The state-owned Kerala State Industrial Development Corporation had bid for Trivandrum Airport along with others, but failed. Since it is a dispute between the Centre and state, Kerala HC said it can be decided only by the SC under Article 131 of the Constitution. The case is still pending.
Land plays a vital role in most of the public assets. The Kerala government told the court that it handed over 23.57 acres of expensive land to the Airport Authority of India in 2005, free of cost, on the grounds that the land value would be reflected as its share capital in a special purpose vehicle. In the absence of a system for sharing revenues from monetisation of public assets with state governments, the Centre can’t afford to push its decisions unilaterally. Discussions and conciliation, and a revenue share model will help maintain a healthy federalism in India.