Indian laws regulating mining were enacted in the 1950s. They are long overdue for an overhaul and the government has been promising to introduce a new Mines and Minerals (Development and Regulation) Bill for some sessions now. But inter-ministerial wrangling, not to mention differences between the Centre and states, have kept pushing back this event. As The Indian Express reported yesterday, it now appears likely that UPA-2 will set up a GoM to persuade different actors to come on a common platform so that the Bill can be introduced in the monsoon session of the Parliament. The challenge that such a GoM would face cannot be underestimated. To begin with the differences that need settling between central ministries, the mines ministry has pitched for doing away with the system of seeking the Centre?s prior approval for allocation of leases of ?strategic minerals?, while the steel ministry strongly favours retaining this system to ensure that their utilisation is in the ?larger public interest?. The mines ministry (rightly) considers the reservation of mineral bearing areas for PSUs as being an anti-competition practice while the steel ministry supports such reservation, discouraging exports (again) in the name of ?public interest?. The law ministry has entered the fray by suggesting that the legislation be rechristened the Mines and Minerals (Conservation, Development and Regulation) Bill. Here too, ?national interest? is being invoked. But, as we have been arguing in these columns, the protectionism being advocated by the steel and law ministries is far from being in public or national interests. If industries cannot pay competitive prices or harness efficient technologies, why should trade barriers or political gainsaying be deployed to support their uneconomic profits? In no way are such ?incentives? in the interest of the Indian people.
The goal of forward-looking legislation as well as the GoM under consideration must be to incentivise prospecting, create competitive bidding, maximise government revenue and provide fair compensation to those displaced by mining projects. All these goals have to be pursued against the backdrop of transparency, which demands that arbitrary nomination processes be replaced by auctions in all possible cases. This also calls for serious action against illegal mining, including by powerful political actors like the Reddy brothers whose Bellary empire?s emasculation of Karnataka and Andhra Pradesh administrations has been exhaustively documented in The Indian Express. With the global commodity outlook getting tighter by the day, India just cannot afford rampant illegality or patronage-driven mining leases any more. Acknowledging this reality, the GoM must bat for competition, efficiency and promotion of private enterprise.
