Minerals – who are the beneficial owners

In an earlier post, we had discussed who owns minerals in India under the Constitution. In broad terms, state governments usually own onshore minerals, all offshore minerals are owned by the union government. There are two additional aspects of minerals to consider, the public trust doctrine and the intergenerational equity principle.

The Public Trust Doctrine, an integral part of common law and derived from Article 21 (Right to Life) of the Constitution, essentially posits that “natural resources including forests, water bodies, rivers, sea shores, etc. are held by the State as a trustee on behalf of the people and especially the future generations.” (Fomento Resorts & Hotels & Anr vs Minguel Martins & Ors (2009) 3 SCC 571). The Supreme Court has held that land, deep underground water, and spectrum form part of the public trust. In simple terms, natural resources are a part of the commons, owned equally by all, present and future.

Minerals are inherited assets. Indian inheritance laws would imply that the present generation is simply a custodian over the minerals for future generations. The Intergenerational Equity Principle, also held to be part of the Right to Life, is the principle that future generations have access to the same resources that we do. If each generation follows this rule, it ensures that future generations have the same opportunities as we do. If we do not follow this rule, our stock of capital would decline eventually resulting the extinction of the human species.

 

In practical terms, inherited assets must either be preserved for future generations, or if alienated, new “non-wasting” assets must be created of at least equal value. For example, when you sell inherited gold, purchase land of the same value. Traditionally, inheritances have been saved in precious metals, precious stones and land – assets that retain value over time. This is true of personal wealth as well as community wealth – temple trusts, waqfs. Physical infrastructure like a bridge is a wasting asset – it has a finite life. The same is true even for investments in education and public health. On the other hand, the environment and minerals are non-wasting assets.

To summarize, minerals are usually owned by some level of government. As minerals are a natural resource, the state is simply a trustee on behalf of the people and especially future generations. Minerals are a part of the commons, owned equally by all. Finally, the present generation do not have an unfettered right to consume minerals. We are simply custodians for future generations. Either the future generations inherit the natural resource, or they inherit something else of at least equal value. In other words, the ultimate owners of minerals are our future generations. As the adage goes, we did not inherit the planet from our ancestors, we borrowed if from our children.

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