Mining companies may be raking in the moolah with soaring international prices and exceptionally low operating costs,but are unwilling to share a part of their profits with people displaced from areas being dug deep. Nor are they keen to make them stakeholders in these projects.
Indias two biggest corporate lobby groups, CII and FICCI,have told Finance Minister Pranab Mukherjee that sharing 26 per cent with tribals or locals will put a very high economic burden on mining companies and make their operations unviable. Mukherjee chairs the GoM set up to finalise the Mines and Minerals (Development and Regulation) Amendment Bill.
The draft MMDR Amendment Bill prescribes that 26 per cent of the equity or profit of mining companies be provided as annuity to project-affected people. In a presentation to Mukherjee,the CII said,Giving 26 per cent stake in equity or profits is not workable. It will discourage investment and drive down efficiency.
FICCIs observations were more direct: No shareholders would like to invest where 26 per cent of the shareholders do not make any contribution to the company. The adverse fallout of this provision will be that raising funds will become difficult. It added that while locals get 26 per cent share in profits,the provision does not require them to share losses.
In his letter to Mukherjee,FICCI secretary general Amit Mitra said that besides a one-time compensation,the Centre and states must encourage the mining sector to undertake more Corporate Social Responsibility initiatives on a voluntary basis.
The mining sector contributes 2.86 per cent of the GDP but the CII estimates that it has the potential for almost 8 per cent.
Mining projects involve high risk and long gestation period. Hence,returns should be high enough to attract investors, the CII said.