Time for taxpayers to sue the govt

If there is one thing the recent Supreme Court verdict on divestment shows, it is this: what we cannot get our politicians to do by force of reason and logic, we can do by moving the courts.

Whether it is anti-pollution laws or justice for the victims of the Gujarat riots, there is still some respect for the verdicts of  the higher judiciary.

That's where one may need to get the reforms bandwagon moving.

To be sure, I don't think the Supreme Court has handed down a great verdict on divestment. But it did go by the letter of the law.

It is not -- as many people have pointed out -- a verdict against privatisation, but merely a reminder to government that if it wants to move in a certain direction, it must get Parliament behind it.

One can draw two conclusions from this: One, reforms cannot be done by stealth anymore. If that continues to happen, it will only be a matter of time before some eager young beaver moves a public interest litigation to stymie the process.

Our laws are so antediluvian that they will have some provision or the other that can be quoted in defence of anything.

That's what happened with HPCL and BPCL. The second conclusion is more positive. I think it is now possible for public interest groups to move the courts on points of law and justice to put some spine back into pro-reform politicians.

We cannot leave that job to the Arun Shouries and Arun Jaitleys alone.

Two groups which should now be getting themselves organised are taxpayers and shareholders. After all, if employees of petroleum companies can move court, why not larger groups like taxpayers and shareholders?

Citizens in general, and taxpayers and shareholders in particular, can justifiably claim to be directly affected by what governments do -- or fail to do.

Whether it is garbage on the streets, mismanagement of public sector assets or losses on bourses, these three categories of  interested parties have a right to demand greater transparency from government and elected representatives. The question is how?

I am sure some legal eagles will be able to find the right clauses in the law to exploit, but the moral argument for such a course of action is simple.

The government is able to function only because taxpayers pay taxes.

Thus far, the only thing clear in law is that taxpayers have a direct responsibility to pay their taxes; but there is no reverse accountability from government to taxpayers, to make sure their money is well spent. What is the use of me paying my taxes if it is wasted?

While elected governments are not accountable only to taxpayers, the latter have at least the right to ask how efficiently their money is used -- whether it is invested in public sector enterprises or social programmes for the poor.

The courts may not be able to question the merits of a policy, but they can surely ask governments to explain how they arrived at important decisions, whether it is CAS, WLL mobility, the end of VSNL's international monopoly or privatisation of petroleum companies.

I can see two immediate targets for public interest litigation: One is the obvious conflict of interest involved in ministers wearing two hats -- as policymakers and as nodal heads for public sector undertakings.

As ministers it is their duty to make policy that subserves the common interest; as administrative heads of listed commercial units they have to help maximise shareholder value.

Can government -- or Ram Naik -- then decide that kerosene and LPG will be subsidised by public sector petroleum companies?

If the policy is to subsidise kerosene, it should apply to all companies, whether they are government companies or private.

There would be no problem either if the oil companies were completely government controlled: both  profits and losses belong to the exchequer.

But when there are minority shareholders around, how can the government inflict commercial damage without compensation?

Clearly, shareholders have a right to challenge this and seek a direction from courts that ministers making policy should not be running PSUs.

The second challenge can come from taxpayers, citizens' groups or public sector employees. All three have an interest in seeing that PSUs are run efficiently.

These companies have trouble performing in a competitive marketplace not because they are inherently inefficient. It is the system -- political interference -- that makes them so.

They do not really have the freedom to manage and compete.

Efficiency and fairness demands that public sector managers be freed of political interference so that they can compete.

What better place than the courts to seek divestment of petroleum companies from the clutches of Ram Naik?

Disclosure: The writer owns shares in HPCL and to that extent is an interested party to the views professed above.

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