Zero Loss

The Indian Experience

Abstract

The Supreme Court has interpreted the principles of equality and common good to include the "Zero Loss" principle when alienating public assets. It is required to achieve intergenerational equity and weak sustainability. Historically, the first-come, first-served method was used for mining lease allocations. However, low and uniform royalty rates failed to capture the full resource rent, leading to significant losses of public wealth, violating the principle. Competitive auctions for mining leases were made mandatory in order to achieve zero loss as well as ensure fairness in the allocation process. Case studies from Goa, Odisha, and Telangana demonstrate that implementation of the principle has substantially increased mineral sale proceeds for state governments as owner trustees. However, since winning bidders have often promised to pay more than the mine gate price, there is a need for robust monitoring to ensure zero loss is sustained throughout the mining phase of these leases.