New Delhi: Chief Justice of India S H Kapadia Saturday said loss is a matter of fact and profit and gain is a matter of opinion, remarks that came against the backdrop of raging controversies over valuation of natural resources.
He made no direct reference to the controversies over the CAG reports on presumptive loss in the 2G spectrum allocation or the gains to private corporates in the coal block allotment but himself drew attention to the ongoing "controversies on valuation".
The CJI also lauded Prime Minister`s address to the nation yesterday on the economic situation saying he brought out the "doom`s day that if we are not careful the young will suffer".
"Sometime we see certain (TV) programmes and we build up our perceptions. How many of us know the basic principle of valuation.
Today a number of controversies on valuation are discussed but the basic principle of valuation is that loss is a matter of fact and profit is a matter of opinion.
"Please apply this test on the controversy going on. I do not want to discuss anything further. Loss is a matter of fact and profit and gain is a matter of opinion.
"So if you understand these principles we will be able to judge. Our perception will become more sound and we know where the shoe pinches," Justice Kapadia said addressing the international conference here on Economic Growth and Changes of Corporate Environment in Asia.
Elaborating on the need for economic literacy, he said a common man needs to be told or explained the difference between fiscal federalism versus resources federalism which creates at times political stress.
In the modern age of communication, the CJI said the community needs to be educated as to whether higher commodity prices are more inflationary than higher fiscal deficit due to under recoveries.
And most importantly whether rule of law promotes economic growth or whether rule of law is an impediment.
He said today the government has to balance for example inflation versus growth.
"These are not easy questions. It is easy for us to sit on arm chair and go on commenting. At the same time the government needs to educate people on these problems and on these challenges which we face," he said.
Referring to a recent judgement of the German Supreme Court on the constitutional validity and powers of the President to enter into deficit control treaty, the CJI said "it would not decide on matters of policy or economic content and refused to grant injunction to establishment of `European stability mechanism`.
"This is for judges to understand that the difference between judicial activism and judicial restraint. If we do not have the model to apply, we need not and we cannot sit in judgement over economics or policy decision," he said.
The CJI said the government should aim for inclusive growth and the nation should strive to achieve economic democracy without which political democracy would be in peril.
"In my view, without this economic democracy, our political democracy would be in peril. One of the important economic drivers is investment. This is for the young people to appreciate," he said.
“Today, India has a young population of around 30 percent, we need 10 million jobs per annum. And if the growth goes down, I am sorry to say unemployment will increase and that is where, investment comes in to bridge the gap and these figures must be kept in mind because not only unemployment will increase and there will be a fall in growth but we will still have a stagnant real income if inflation is not controlled.
"These are very serious problems and I am very happy that yesterday the honourable Prime Minister had brought out doom`s day that if we are not careful, the young will suffer," he said.
He said the biggest challenge that India faces is not economic growth but inclusive growth or growth with inclusion and referred the vision of Constitution framers like Dr B R Ambedkar.
He said when Article 39 B which says natural resources should be allocated or distributed for common good, was incorporated in the Constitution, Ambedkar had said at that time that the main object of incorporating the directive principles in the Constitution was to lay down that future governments will strive to achieve economic democracy.
The CJI stressed the need for increase in legal literacy and strengthening of the rule of law as without the rule of law, well-connected people will grab unfair share in growth.
"Apart from economic literacy, we need to increase our legal literacy also," he said.
"Today in certain areas of development there is a fear which equates development with displacement. There is a fear expressed by tribals. There is a fear experienced by farmers. These fears need to be dispelled," he said.