Disinvestment in the Petroleum and Mining Sector: A Critical Analysis

15 Pages Posted: 7 Nov 2011

Date Written: July 6, 2010

Abstract

The previous decade, which ushered in the new economic policy tailored towards liberalisation, saw a momentous shift in the policy towards government owned and controlled enterprises popularly known as Public Sector Undertakings [hereinafter PSUs]. The earlier protectionist regime gave way to a scenario wherein the State, realising the need for withdrawing from economic activities, began handing over the control of these PSUs to private bidders. This process of deregulation through the mechanism of disinvestments has brought to the fore several questions as to its legal validity vis-à-vis safeguarding the constitutional credo of socialism and the vision of our founding fathers to ensure state control of key economic sectors. Lately, the process of disinvestments has been extended to crucial sectors of the economy such as the petroleum and mining sector and thus is likely to have an impact on the lives of millions of people.

Be that as it may, the objective of this paper is limited to a technical examination of the constitutional validity of the disinvestments process in the petroleum and mining sector and not to weigh the pros and cons of the process. This assessment shall be made at three levels. Firstly, in Part I the paper seek to examine the scope of the powers of the higher judiciary to adjudicate upon the executive policy decisions in general and in particular to set limits, if any, to the tide in favour of disinvestments. Secondly, in Part II the paper attempts to analyse the constitutionality of the process of disinvestment on the anvil of socialism, which appears in the preamble to the Constitution as one of its cherished ideals. The process is examined in light of the meaning of the term socialism as interpreted by the Supreme Court so as to gauge the extent to which private enterprise can be allowed in the Indian economy as per the Constitutional scheme. In Part III we shall assess the constitutionality of disinvestments in these crucial sectors in the background of the right to life and the right to subsidized oil and gas. Part IV concludes the discussion and seeks to provide an insight into whether PSUs in the petroleum and mining sectors can be disinvested.

Keywords: Disinvestment, Petroleum, Mining Sector, Public Sector

Suggested Citation

Thakur, Rustam Singh, Disinvestment in the Petroleum and Mining Sector: A Critical Analysis (July 6, 2010). Available at SSRN: https://ssrn.com/abstract=1955447 or http://dx.doi.org/10.2139/ssrn.1955447

Rustam Singh Thakur (Contact Author)

Hidayatullah National Law University ( email )

Civil Line, Beside Raj Bhawan
Near Raj Bhawan
Raipur, Chattisgarh 492001
India

HOME PAGE: http://www.hnlu.ac.in

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