The Supreme Court has stopped iron ore mining by the Reddy brothers along the AP-Karnataka border, the charge being one of encroachment. India is a major source of minerals (chromite, coal, iron ore, bauxite). With global demand and prices increasing and expected to increase further, mining is lucrative, for exports and domestic development. Consequently, we have a National Mineral Policy (1993, 1994, 2008) designed to ensure private investments (domestic and foreign) and ?sustainable development?. The 2008 version was after the 2005 Hoda Committee, with its emphasis on sustainable development.
The 2009-10 annual report of the ministry of mines accordingly states, ?The basic approach is that (i) mining activity can and should enrich rather than deplete biodiversity as a corollary to their intervention in the ecology of the area of activity; and (ii) mining can and should contribute to the economic, social, and cultural well-being of indigenous host population and local communities.? If these laudable objectives are satisfied, there should be no problem. So, why do we have a problem?
First, 90% of operational mines are in 11 states (AP, Orissa, Chhattisgarh, Jharkhand, TN, West Bengal, Maharashtra, Rajasthan, MP, Gujarat and Karnataka), (data from CSE). Second, as a corollary, Maharashtra, TN and Gujarat may be diversified, but several other states (Orissa, Chhattisgarh, Jharkhand) are dependent on minerals and are also poor, not only in terms of per capita income, but other human development indicators, too. There are 50 major mining districts. Of these, 60% are in India?s 150 most-backward districts. But that surely is the point. These states are backward and rich in natural resources. Tapping this comparative advantage should provide paths to progress. Third, that hasn?t quite happened. Earlier mining was small-scale and public sector-driven. Modern mining is large-scale, mechanised and private sector-driven. This is understandable, because one wishes to reduce costs. However, declining employment intensity is a fact and becomes starker if one excludes coal. Fourth, major mining districts have extensive forest cover and there is diversion of forest land for mining. De jure, forest clearances are required under the Forest Conservation Act.
But, fifth, de facto, we have a governance problem. Rules and regulations are flouted and there is no enforcement, unless countervailing pressure is exerted by courts or Naxalites. Sixth, since half of those 50 major mining districts have large shares of tribal populations, there is an issue of livelihood and displacement of tribal populations, whose traditional rights on forests and natural resources have also been usurped by arbitrary misuse of executive powers. Had mining not been opened up to large-scale private sector participation, it is probably the case that the Naxal problem would not have escalated on the scale it has. Seventh, there is an issue of environmental degradation and waste generated from mining. Eighth, to add to the governance problem, there is a lack of transparency in the award of leases. Ninth, also on that governance mode, decentralised planning hasn?t happened and decisions are taken top-down. The interests of citizens, local communities and indigenous communities are not considered and no one has yet worked out mechanisms for community participation and co-management in mining. Tenth, if local communities are dissatisfied with top-down decisions, there are no satisfactory redressal mechanisms. The 2008 National Mineral Policy (NMP) has still not been reflected in necessary legislative changes (Minerals Development and Regulation Act of 1957). But the moot point is whether it addresses these ten issues, though it does use expressions like sustainable development, restoration of ecological balance, stakeholder interest and international best practices. For instance, questions like resettlement and rehabilitation, Panchayat Extension to Scheduled Areas Act and fixation of royalties still remain vague. It shouldn?t be surprising that Orissa, Chhattisgarh and Jharkhand haven?t exactly welcomed the 2008 NMP.
In fairness, there is also a Model State Mineral Policy (2010) and a Modified Draft Mines and Minerals Act (2009). In theory, these should increase transparency in granting leases and improve regulation. A Mining Administrative Appellate Tribunal has also been proposed. Perhaps one should go back and read the Approach Paper to the 11th Five Year Plan. This said, ?India is a resource rich country but India?s mining potential has been much less explored than other comparably endowed countries. The Mines and Minerals Act and the Mineral Concession Rules as well as the FDI policy have also been revised on several occasions with a view to attract private investment for exploration of mineral deposits and operation of mines but actual investment in this area has been very meagre because of procedural hassles and numerous discretionary provisions in the laws, which discourage prospective investors. The provisions for rehabilitation are also unsatisfactory.? The last sentence was almost tagged on as an after-thought, and policy focused on procedures (seamless transition between reconnaissance, prospecting, mining, royalty rates). Somewhat reminiscent of the way SEZs were handled, myopia that ignored broader social issues catalysed the resentment.
The author is a noted economist