Pragmatism on revenue

The oil question in Nagaland can no longer remain trapped between history, politics and legal uncertainty. For more than six decades, the people of the state have waited for a political settlement while the economy has remained heavily dependent on central assistance. That dependence cannot continue indefinitely as Nagaland needs a sustainable revenue base of its own, and its petroleum and natural gas resources could form an important part of that base if handled carefully and transparently. The 1951 Naga plebiscite remains an important part of the political history and sentiment of the Naga people. The refusal to proceed with oil exploration has also been linked to the larger political question and the belief among Naga political groups that extraction should follow a final political settlement. However, six decades is an exceptionally long time to keep an economic resource untouched while waiting for a political agreement whose timing remains uncertain. The irony is that Nagaland was created as a state in 1963, and its elected government has since functioned within the Indian constitutional system. The state has a Legislative Assembly whose members are elected by the people and a government that is accountable to the electorate. This democratic mandate cannot simply be treated as irrelevant while every major economic decision remains suspended until the political issue is settled. There is also a serious constitutional dimension. Article 371A provides special protection concerning ownership and transfer of land and its resources. Nagaland used this provision while framing its Petroleum and Natural Gas Regulations and Rules in 2012. However, the legal validity and extent of the state’s authority over petroleum and natural gas have remained contested, particularly because petroleum regulation falls under the Union List. The Gauhati High Court is now dealing with this larger constitutional dispute. This is precisely why the political leadership have to come to grips and have to stop treating oil extraction as a choice between Naga aspirations and economic development. The two need not be presented as mutually exclusive. A properly negotiated framework can protect land rights, environmental interests, local ownership concerns and the state’s constitutional position while ensuring that the resource is developed. The economic argument is compelling. Oil production has continued for decades on the Assam side of the border. Nagaland’s adjoining areas are part of the same broader geological region, and petroleum has already been discovered and produced in the state, including at Changpang in Wokha district. Production began there in 1983 but was stopped in 1994 amid disputes over royalty and production. The state government has since repeatedly sought to restart exploration and extraction. Nagaland cannot afford to remain a state rich in natural resources but poor in its own revenue. Central grants will remain necessary, but they cannot substitute forever for an economy capable of generating substantial internal revenue. The answer is therefore neither reckless extraction nor indefinite postponement. The state government, Naga political groups, tribal bodies, landowners, environmental experts and the Union government must work towards a transparent framework. Exploration should begin with proper geological assessment, environmental safeguards, clear ownership arrangements and an agreed revenue-sharing mechanism. The political issue deserves a political settlement. Economic development, however, cannot be held hostage forever to the uncertainty surrounding that settlement. Nagaland has waited long enough. The people who elected their representatives also have a right to ask why their natural resources remain untapped while their state continues to struggle for revenue.