The former Collector of Madurai district in Tamil Nadu, U Sagayam, wrote to the Principal Secretary of the State Industries Department in May, about illegal granite quarrying in Madurai. He stated that the loss of revenue to the government in recent times in Madurai district alone would be more than R16,000 crore. The letter was leaked to the press and the granite issue literally exploded and became the biggest scam to be exposed in recent times. It has been long known that a powerful granite lobby with a lot of political clout has been operating in the southern districts of Tamil Nadu. The quarrying tenders had been going in their favour and the earlier pioneers have been fading from the scene.
After the recent revelations, there has been a flurry of activity. The Madurai police has registered cases, sealed buildings, arrested leading mining baron PRP Granite Exports?s partner PR Palanichamy (among others), issued lookout notices against 12 persons including Dayanidhi Alagiri, son of Union Minister MK Alagiri, banned many companies from exporting granite, arrested officials and so on. Several skeletons are now tumbling out of the closet.
The Madurai granite lobby has been accused of grabbing government and private plots and panchami lands meant for dalits, occupying water bodies and waterways, and encroaching upon sites of cultural and archaeological significance. They have uprooted boundary stones put up by the authorities. Laws have existed only on paper in these areas. Sagayam?s letter says there has been loss of livelihoods; ponds and lakes hitherto used for irrigating farmlands have been destroyed or rendered useless by private operators who had converted them into storage yards. Destruction of the water bodies has forced farmers to scale down farming activities. The cattle population has also come down drastically as the grazing land has shrunk.
Granite dimensional block production takes place in at least 12 states in India, a lot of it in the South because of the availability of attractive colours. Granite gets cut into blocks, slabs and tiles, made into monuments and other decorative items depending on customer preference. There is a great demand for these in the international market.
The granite mining industry is regulated by respective state governments. Leases in Tamil Nadu are expected to be granted keeping in mind the government?s granite conservation policy, the Mines and Minerals (Development and Regulation) Act 1959, the Tamil Nadu Minor Mineral Concession Rules, 1959, and the Granite (Conservation and Development) Rules, 1999. The Mines and Geology Departments of the states are the regulatory authority. Minerals belong to the government, surface rights belong to the revenue department if it is government land, patta land belongs to the landowner and forest land belongs to the forest department.
With so many checks and balances, how can such large-scale corruption have happened without various authorities working hand-in-glove with the errant industry? It is well known that both the leading political parties (DMK and the AIADMK) have turned a blind eye to what has been going on. When the industry was in its nascent stage, more than four decades ago, auctions used to be conducted by district collectors for black granite which was in abundance in the newly formed Dharmapuri district. Coloured granites were unheard of until 1975. Many pioneers of the industry from that era such as Gem Granites brought the latest technology in mining and processing into the stone industry at that time. They promoted hitherto unknown stone varieties and built up new markets for Indian stone and value-added products, and put the Indian stone industry on the international map.
At this point, Tamil Nadu dominated the granite industry in the South. The then chief minister, MG Ramachandran set up Tamil Nadu Minerals Limited (TAMIN) in 1978, to provide employment opportunities and bring more income to the state. TAMIN, which was producing only black granite, was given total access to government land. In 1992, the state ended its monopoly over quarrying in government land, leasing out land and issuing licenses to private companies for mining granite.
To quote from Sagayam?s letter, ?TAMIN had quarries with good-quality granite. It allowed private players into its territory by introducing the raising-cum-sale system in different parts of the State, saying it could not afford sophisticated equipment. The introduction of the contract system in the late 1990s paved the way for pilferage and smuggling from several TAMIN quarries to private contractor?s storage yards as the contractors had their own quarries in adjacent plots in violation of rules.?
People with money power and political clout quoted very low costs for granite production and inflated market prices for lifting it from the TAMIN quarry. It was also customary to show figures which were far below the actual granite raised. Many things went in the new entrants? favour. Quarrying technology has improved a great deal. With liberalisation, bringing in new technology became possible and this helped make the recovery processing system much easier. Loans also became more readily available. They could now extract 1,000 cubic metres of granite in the time it took to extract 100 cubic metres a few years earlier. The entire production in Tamil Nadu was 5,000 cubic metres 20 years ago. By contrast, PRP Granites? has produced 50,000 cubic metres in two years.
There are other people in this industry who have stuck to their conservative ways and thus have lost out in the last few years. There are many clusters of this industry at the tri-junction of Tamil Nadu, Andhra and Karnataka, particularly at Hosur, which are at a standstill today. Still, it is a generator of employment in the rural areas, and in allied industries like transportation.
Granite industry sources dispute the figures quoted for the loss to the exchequer (around R45,000 crore). According to the CAPEXIL annual report, last year granite was exported from 12 states to the tune of R6,000 crore. For the last 12 years, the total export amounted to about R42,000 crore. Out of the total exports from India, Tamil Nadu has a share of 25% and southern Tamil Nadu accounts for half of this turnover. The industry is worried that with the banning of exports from the state, the activity will shift to Andhra or Rajasthan, where the state governments have a more industry-friendly policy. Apparently Ongole in Andhra, with minor ports nearby, is attracting a lot of business. The Tamil Nadu industry is also suffering from massive power shortages, diesel price hikes and now non-availability of material. It is hoping that the current chaotic conditions will end soon and the state government will work towards bringing the industry back on to the tracks.