The Indian government has taken vocal exception at Barack Obama's comment on what he called India's deteriorating investment climate, but its Attorney General found it expedient to quote the US President today to make a point in the Supreme Court, during a hearing on the presidential reference on 2G.
Attorney General GE Vahanvati quoted the Obama criticism to indicate the fears expressed on the foreign investments coming to India during the hearing of Presidential reference in the apex court. The Supreme Court's 2G judgment of February this year said that all the nation's natural resources should be auctioned. He said India was limiting Foreign Direct Investment in too many sectors and argued that the court's judgment on 2G had raised many fears and doubts among foreign investors which would adversely affect the economy.
And then pointed to the remark Mr Obama had made on Sunday: "In too many sectors, such as retail, India limits or prohibits the foreign investment that is necessary to create jobs in both our countries, and which is necessary for India to continue to grow... there appears to be a growing consensus in India that the time may be right for another wave of economic reforms to make India more competitive in the global economy." The Indian government had immediately shot back to say that the Indian economy was doing fine, thank you. Commerce Minister Anand Sharma said yesterday, "He (Obama) has every right to convey what his perceptions are but the policy-making is a sovereign decision and India's FDI policy regime is investor-friendly".
Mr GE Vahanvati said in court, "If all natural resources are auctioned, then India will become a laughing stock internationally. Foreign investors will say it is not safe to invest in India. Even the US President is saying it is not safe to invest in India."
The top court was unimpressed; it dismissed the A-G's argument saying the Centre could not cite FDI as a ground for arguing on the maintainability of the reference.
The Supreme Court is hearing a presidential reference seeking clarification on the various points of its 2G judgment. Among those, the Centre has sought to know whether auctioning of natural resources, as ordered by the top court, will apply only to spectrum or to other resources as well. The Supreme Court had scrapped all 122 licences for 2G spectrum given at throwaway prices by former Telecom Minister A Raja in 2008 and ordered that they now be auctioned. Mr Raja had chosen not to auction and followed a first-come-first served policy instead.
The Centre has argued that auction cannot be the only way to dispose of all natural resources, and that a uniform policy on their distribution is not practical, the crux of the AG's argument today too.
The Centre has also suggested that the allocation of natural resources is a policy matter and beyond the purview of judicial review. CII and the Federation of Indian Mines also argued supporting the Centre that court should hear the reference. Supreme Court is now examining whether it can take up the Reference for giving its advice as the other parties CPIL and Subramanian Swamy are opposing it.