Capitulation to the US on nuclear liability: former Power Secretary’s letter to Arun Jaitley

This Republic Day will be remembered for a shameful capitulation to the US interest by the Modi government, circumventing the Indian people’s right to sue the nuclear suppliers on the US demand, by providing an insurance cover. We are publishing a letter that the former Union Power Secretary, Dr. EAS Sarma wrote to the Finance Minister Mr. Arun Jaitley a few days back on the issue –

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Shri Arun Jaitley
Union Finance Minister

Dear Shri Jaitley,

Subjet:- Indo-US negotiation on civil nuclear liability

Dr. EAS Sarma

Dr. EAS Sarma

It has been reported that, in the ongoing negotiation between the Indian and US sides on civil nuclear liability, the Union government is contemplating several options including extending a sovereign guarantee to take on the excess liability over and above the cap of 300 million SDR provided under Section 6 of the Civil Liability for Nuclear Damage Act (CLNDA), 2010. According to the news reports, which appear to be true, the government is also considering a blend of sovereign guarantee, insurance cover provided by PSU insurance companies and even bonds issued by PSU banks! This is prima facie violative of the intent of CLDA and also violative of the established polluter-should-pay principle stipulated by Hon’ble Supreme Court in several cases.

The cap of 300 million SDR under Section 6 of CLDA was the outcome of an elaborate deliberation within the Parliament. That cap does not fully cover the kind of liability arising in the case of Fukushima-like severe nuclear accidents and it is the subject matter of a PIL pending now before the apex court.

Under Section 17, the operator has the right of recourse to claim compensation from the reactor suppliers if the accident occurs as a result of a fault attributable to the suppliers. In other words, if an accident were to take place as a result of a deficiency attributable to the suppliers and it causes injuries, loss of life and damage to property and environment, the liability for it should devolve on the suppliers.
This would be consistent with the polluter-should-pay principle. This is also consistent with the assurances given by the government to the Parliament when CLDA was approved. There can be no compromise on this.

What the government is apparently contemplating now would imply a serious deviation from Sections 6 & 17 of CLDA, as a sovereign guarantee, or an insurance cover provided by a State owned statutory insurance company or a bond cover provided by a State owned financial institution would be equivalent to the State bearing that liability. State owned PSUs are arms of the government under Article 12 of the Constitution.

Moreover, the Fiscal Responsibility and Budget Management Act (FRBMA) has set a limit on exposing the Union finances to guarantees and contingency liabilities.

Most importantly, the hesitation on the part of the US MNCs to take on the liability arising on account of an accident attributable to reactor design deficiencies raises serious doubts over the safety features of the reactors they will supply. We should keep in view that the Fukushima reactors were supplied by US MNCs and India should be circumspect in accepting terms that run counter to its own self interest and well being of its people.

Kindly treat this as important. The government should address the issues I have raised here with the required seriousness, failing which I will be constrained to seek judicial intervention.

I hope the Ministry of Finance and Department of Atomic Energy will provide clarity on these issues before rushing into concluding any deal with the US, behind the back of the Parliament.

I am circulating this letter widely among the press and the civil society so that there may be an informed debate on the issues I have raised.


Yours sincerely,

E A S Sarma
Former Secretary to GOI

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