Political liability

The political consensus between the Congress and the BJP to find a way out of the impasse on approving the pending nuclear liability legislation is in itself a big relief. The inability of the ruling party and the main opposition to work together on major issues of national importance has been one of the more depressing features of our political life in recent years. Nowhere has this been more damaging than the historic civil nuclear initiative that the UPA government had negotiated with the US and the international community during 2005-08. Despite the promise of the initiative to end the nation’s prolonged international nuclear isolation,the two parties allowed the ideological Left to set the terms of the debate.

However,it is not clear if the final formulations of the proposed legislation are pragmatic enough from the perspective of the original goal — to build an expansive nuclear power programme. Three questions are germane. Do the proposed changes improve the balance between adequate and timely compensation for the victims of a potential accident and the need to develop a sustainable framework for commercial nuclear insurance? What about the nature of the alignment between the national legislation and the best international practices on managing the risks of nuclear power generation? Finally,will the new law facilitate or hinder the prospects for building a globally competitive nuclear industry in India? While the report of the parliamentary panel and the final version of the legislation to be introduced shortly deserve close reading,the results from the first cut are decidedly mixed.

Among the compromises worked out in a parliamentary panel is one to triple the level of immediate compensation from the operator to the victims. If the initial version pegged operator liability at Rs 500 crore and suggested it was a “ceiling”,the new bill is expected to make it clear that Rs 1,500 crore is only the “floor”. This is a step forward. The government,however,might have ceded too much to the opposition which made supplier liability as some kind of an ideological target. Most suppliers,domestic and foreign,are likely to balk at the tougher provisions in the proposed legislation. Coupled with the deletion of the references to the international convention of supplementary compensation for nuclear damage,the gap between the proposed legislation and international norms will only widen. Managing this divergence,in the negotiation of actual commercial contracts with the nuclear equipment suppliers,now becomes a major challenge. It will be a pity if the nation will not be able to build a robust nuclear programme,just because it has a law on nuclear liability that put political posturing above the requirements of sensible policy.