The Bangalore-Mysore infrastructure corridor has been in the midst of a storm in the last few months.

The NGOs and Deve Gowda have been against the project while the private sector project promoter, Nandi Infrastructure Corridor Enterprises (NICE), and the Karnataka government have been the proponents of the project.

The main accusation has been the it is a land-grab project while the proponents argue that the project is unviable merely on tolling basis but will become viable if the increased value of the land alongside the road can be converted into a revenue stream for the project promoters.

However, the recent decision of the government to four-lane the existing Bangalore-Mysore highway raises new doubts as to whether the parallel express way is needed at all. Thus, a reappraisal of the project from the financial point of view becomes a must, in public interest.

According to newspaper reports, the government is supposed to form a committee to look into the reappraisal of the project, but given the various interests that are at play, it is doubtful if the public at large will find the outcome of the committee, whatever it is, to be credible.

The only way to ensure public confidence, therefore, is to entrust the task of reappraisal to professional third parties. Here comes the rub. For, the agreement between the government and NICE is stated to be a confidential document.

The Karnataka High Court has upheld the confidentiality of this commercial agreement and in effect has put the document outside public scrutiny. Since the high court ruling predates the Karnataka Information Act, we are informed that even the latter cannot come to the rescue of transparency seekers.

A question arises here as to whether any commercial arrangement with the government as one of the parties can ever be confidential and kept away from the public. The government is after all an agent of the public and the public is the Principal.

The Principal has a right to know and be satisfied if the agent is acting in her best interests. The present situation follows the humorous, if not bizarre, dictum of Sir Arnold of Yes Minister that there can be either transparency or governance!

A similar situation had existed in the case of power purchase agreements (PPAs)contending that they are commercial documents and should, therefore, be confidential.

But public pressure had overturned that proposition and today in India all PPAs are classified as public documents that are transparent and freely accessible. They are even put on the websites of regulatory commissions.

The main reason behind the confidentiality of the BMIC project document appears to be to keep it away from NGOs who may or may not be motivated by public interest considerations alone.

But that is not a sufficient reason. As the Chinese saying goes, if you keep the windows open, the flies will come in.

The courts are already aware of the nuisance value created by interlopers and busybodies that for any public interest litigation it has set the criterion of locus standi for the PIL to be admitted. However, the cause of public interest is so paramount that a public project cannot be kept away from public scrutiny on the flimsy grounds of confidentiality.

In some cases, project promoters argue that the financial document is an intellectual property of the promoter because through diligent financing techniques they may have brought down the cost of the project for competitive bidding by spending huge amounts on financial consultants.

Putting them in the public domain would entail certain risks — like competitors stealing this intellectual property — and thus neutralise the promoter's competitive edge.

A valid argument, but in such cases there has to be a division of the project document into the basic costs of the project, which must be in public domain and the financial model, which may be kept confidential. But on the face of it the BMIC project does not seem to attract this provision.

Thus the government of Karnataka seems to have tied its own hands in giving itself the freedom to consult professionals in this crucial issue of public interest. However, there are Supreme Court rulings, affirming that any contract can be renegotiated if it can be reasonably established that the existing one is against public interest.

The government may have to resort to this in annulling the confidentiality of the BMIC project. In order that such mistakes do not recur in future, both the central and state governments must enact legislation that there cannot be any confidentiality in the case of public projects.

Some may argue that this will slow down foreign direct investment and may be perceived as investor unfriendly. However, such arguments do not stand the test of reason.

In fact, a contract environment that protects both the investors and the consumers equally forcefully will bring in more projects in the long run by eliminating the scope for underhand dealings.
(The author is a professor at IIM, Bangalore and holds the RBI Chair)