Chief economic advisor in the finance ministry Kaushik Basu sees the need for a national super-regulator for natural resources like coal, iron ore, bauxite, copper ore and other minerals. Inevitably, these resources have to be used for the creation of ?socially useful? industries, but without any wanton neglect of the environment, he told FE in an interview.
Arguing against unhealthy competition among state governments to lure investors in mining and minerals-based industries through ?cut-price deals,? he said policy coordination at the central level is imperative.
Basu said: ?There is a need for some kind of centralised regulation defining the extent to which natural resources like minerals can be exploited and the ways to preserve them for posterity. Of course, states also need to have a role in this regard. The entire design (of policy) can?t be left to the Centre because in a diverse country like India, regional priorities need careful consideration. But there ought to be a super-regulatory body at the level of the nation-state that can manage, oversee and calibrate the use as well as preservation of various natural resources that are increasingly going to be in short supply in the years to come. Unhealthy competition among states to attract investors through cut-price deals must be discouraged.?
There is a tendency among mineral-rich states to commit grant of mining leases to companies which promise to set up industries in their respective states. Recently, the Supreme Court discouraged this trend by setting aside the recommendation by the Karnataka government to allow mining of iron and manganese ores by JSW Steel and Kalyani Steels at 380 hectares of land in Sandur, which falls in Karnataka?s Bellary district. The court?s reasoning is apparently that other yardsticks like mine management, technical expertise, adherence to R&R policy should also be taken into account while mines are allocated.
The CEA?s opinion is in conformity with the sentiments already expressed by some wings of the central government like the steel ministry for federal regulation of natural resources. The Mines and Mineral Development & Regulation (Amendment) Bill which seeks to ease investments by foreign and local private companies in mining was cleared by a group of ministers on Friday. On regulating mining in regions inhabited by tribal people, Basu said: ?We ought to protect environmental resources for future generations, but at the same time, it is imprudent to go to the other extreme of keeping them as they are, not being used for the nation?s and the people?s development. India is a country where there is still a large mass of people who are poor. And it is for their sake that we should make judicious use of land and other natural resources.?
On land acquisition policy, the chief economic advisor said that earmarking a certain level of land which has conventionally been used for agriculture for the industry is a natural path of progress for which there are examples in many countries. He, however, said that giving a free hand to the private sector could at times lead to exploitation of the underprivileged in various ruthless and subtle ways. So, the land acquisition policy should recognise the government?s right to step in, and play the role of a mediator between the owners of small holdings and the industrial houses/potential investors.
?The idea should be to facilitate establishment of socially useful industrial projects,? he said. ?It is important that when rural land is acquired for industrial purposes, the rural people and tribals who live on that land too benefit substantially from its future price rise. The compensation policy should be such that a part of price rise resulting from the development of the land is conferred on the people from whom it is bought over,? Basu added.
The multitude of approvals needed at the state and local levels including environmental clearances are a major stumbling block for industries based on minerals. States adopt disparate standards for giving mining leases and this, some argue, has led to a situation where the country?s mineral resources are over-exploited and not managed with a national vision.
Delays in allocating mining rights are holding up many large and labour-intensive industrial projects. ArcelorMittal?s proposed steel projects in Jharkhand and Orissa and Posco?s project in Orissa are among those held up for want of clearances. Vedanta Resources? bauxite mining project at Orissa?s Niyamgiri hills has been refused environment and forest clearance by the environment ministry for alleged violations. Recently, congress leader Rahul Gandhi termed Vedanta?s forceful acquisition of tribal land ?illegal.?