Relevance: GS III (Energy Security & Infrastructure) | Source: The Hindu

1. The Context: A Historic Shift

The Parliament has passed the SHANTI Act (Small Harmonised Atomic Nuclear Technology Initiative Act), marking a major policy shift in India’s energy sector.

• Ending Monopoly: Unlike the Atomic Energy Act, 1962, which restricted nuclear operations to Central Public Sector Undertakings (like NPCIL), this new Act allows private companies to own and operate nuclear power plants.
• The Goal: To accelerate nuclear capacity addition (targeting 100 GW by 2047) by attracting private capital and foreign technology.

2. The Controversy: Shielding Suppliers

The most debated aspect is the drastic change to the liability framework established by the Civil Liability for Nuclear Damage Act (CLNDA), 2010.

• Removing “Right of Recourse”: The Act omits the controversial Section 17(b) of the CLNDA. Previously, this section allowed the operator (e.g., NPCIL) to sue the supplier (e.g., GE, Westinghouse) if an accident was caused by defective equipment.
• Indemnity: By removing this, the SHANTI Act effectively indemnifies suppliers, shielding them from civil or criminal liability even in cases of design defects.

3. Critical Issues: Moral Hazard

• Liability Caps: The Act caps the liability for private operators at ₹100–3,000 crore (depending on plant size). Critics argue this is a pittance compared to the actual cost of nuclear disasters (e.g., Fukushima cost ~₹46 lakh crore).
• Moral Hazard: By limiting financial risk for operators and suppliers, the Act creates a “Moral Hazard”—reducing the economic incentive to invest in expensive safety features.
• Conflict with Law: This statutory cap contradicts the Supreme Court’s “Absolute Liability” principle (Oleum Gas Leak case), which holds hazardous industries liable without any limit.

UPSC Value Box

Q. With reference to the Civil Liability for Nuclear Damage Act (CLNDA), 2010, and recent developments in the nuclear sector, consider the following statements:

1. The Atomic Energy Act of 1962 allowed private sector companies to operate nuclear power plants in India.
2. The principle of “Absolute Liability,” as laid down by the Supreme Court, imposes a cap on the financial liability of hazardous industries.
3. The “Right of Recourse” provision in nuclear liability laws allows the operator to claim damages from the supplier in case of equipment failure.

Which of the statements given above is/are correct?

(a) 1 only

(b) 3 only

(c) 2 and 3 only

(d) 1, 2 and 3

Correct Answer: (b)