| Introduction: Contextual Introduction Body: Concerns of Bill around federalism and how it alters relations between the Union & states. Conclusion: Way forward |
The Oilfields (Regulation and Development) Amendment Bill, 2024 aims to redefine India’s regulatory framework for petroleum and mineral oils, addressing gaps in the existing law while promoting domestic production and private investment.
Federalism Concerns and Criticisms
- Centralization of Power: Opposition parties argue that redefining terms such as “mineral oils” and “mining leases” dilutes states’ traditional role in managing natural resources within their territories. The Bill undermines the spirit of cooperative federalism by prioritizing Union interests without adequate safeguards for states’ involvement.
- Judicial Precedents and Constitutional Boundaries: The Supreme Court’s July 2024 judgment upheld states’ taxation rights under Entry 50. This Bill may be viewed as circumventing this ruling by transferring regulatory and financial authority to the Union.
- Environmental Oversight: Critics highlight the potential risks of allowing private operators more discretion and removing criminal penalties for violations. While the Bill introduces provisions for curbing greenhouse gas emissions, the lack of stringent penalties may reduce accountability, particularly in ecologically sensitive states.
- Revenue-Sharing Mechanisms: The absence of a clear mechanism for equitable revenue sharing between the Union and states adds to concerns of fiscal imbalance.
How the Bill Alters the Balance of Power?
- Shift in Regulatory Authority: The Bill replaces “mining leases” with “petroleum leases,” redefining the jurisdiction over mineral oil resources under Entry 53 of the Union List, which grants Parliament power over oilfields and petroleum products. This reframing could curtail states’ power over “mineral rights,” which is protected under Entry 50 of the State List. By excluding petroleum from the definition of “mineral rights,” states lose direct control over resource management and taxation.
- Implications for States’ Revenue and Autonomy: States retain the right to grant petroleum leases but may see reduced control over taxation and royalty collection, as these could now be interpreted under the Union List. The Supreme Court’s ruling affirming states’ exclusive power to tax mining activities adds to the contention that the Bill could weaken fiscal federalism by redefining key terms like “mineral oils.”
- Encouragement of Private Investment: The Bill prioritizes private sector involvement, with provisions for non-alteration of existing leases, decriminalization of violations, and incentives for private players. While this might boost efficiency and production, it sidelines public sector entities like ONGC, potentially diminishing the role of states in shaping industrial policies in this sector.
Conclusion
A balanced approach, rooted in cooperative federalism, is essential to reconcile national priorities with the autonomy of states and ensure sustainable and equitable development of natural resources.
