A BID TOO FAR The government’s increasing use of auctions to sell natural resources does lead to fair pricing and transparency. But it has limitations.
t is a one-stop solution the government seems to have found to preclude allegations of corruption in the allocation of natural resources – hold an auction. From oil and gas blocks to coal blocks to spectrum bandwidth, auctions have become the preferred mode of sale to both ensure transparency and generate substantial revenue. The civil aviation ministry even considered auctioning unused and future bilateral rights (rights to fly to foreign destinations negotiated with destination countries), though the proposal was eventually stalled due to internal differences over its advisability. The reverse auction, where the government is the buyer of goods or services, has also become an effective means of driving down prices, especially in the case of solar tariffs.
Last year alone, a total of 55 coal mines were auctioned over three rounds, of which 28 went to private companies and 27 to Central and state PSUS. 3G and broadband wireless spectrum was auctioned too, earning the government over `1.1 lakh crore. This year, there are expectations of another `70,000 crore from the auction of 67 small oil and gas fields, which began in late May. (So far, under the New Exploration Licensing Policy or NELP, formulated in 1998, over 250 hydrocarbon blocks have been auctioned across nine rounds.)
Two Supreme Court judgements have also contributed greatly to making auctions the norm across government departments. The first, in February 2012, cancelled 122