india topographical map

Civics textbooks define State as a self-governing political entity. Though among the sine qua non prescribed for a State, the most important is the Sovereignty, a State is not a State without “people who live there on an ongoing basis”, and “has a government which administers the people”. But these two sine qua non are not both at the same level : the State derives its being from the people; the government derives its raison d’être from the State.

You might be wondering why I have launched this civics hairsplitting. In recent times a fundamental question has arisen with respect to the national resources; it has arisen very prominently in the case of spectrum and coal blocks allocation. Everybody agrees that national resources belong to the State, and that they should be utilised for the maximum welfare of the State. That is good in principle.

india topographical map

But State is an abstract concept; a real entity called State does not exist. What exists in reality are the Government and the People. (I have deliberately capitalised the first alphabets of the words government and people, along with the State, to stress the fact that we are talking about three distinct entities.) Then the question arises : Whose welfare is to be maximized – welfare of the Government or the welfare of the People ?

Government holds the collective wealth of the People in trust. Welfare of the Government, would therefore theoretically mean the welfare of the People. There would be no problem then. But in practice, when we need to maximise the welfare of the Government, what variable do we need to maximise ?

Invariably the variable that presents itself is the Net Revenue that the Government earns from these resources; because, this revenue is used by the Government for the welfare of the People. We instinctively assume therefore, that, for instance, the spectrum should be so priced as to maximize the Net Revenue of the Government from it. This, for instance, is the assumption that lies underneath CAGs computation of  Rs 1.76 lakh crores loss from the 2G spectrum allocation.

The question that arises then is : Does the Net Revenue to the Government constitute truly the welfare of the people ?