Having given up on the nuclear deal and with elections in the not-to-distant future, the Congress (in particular the prime minister) has turned its attention to economic reform and governance, which should have been priorities at the beginning of the mandate, not towards the end. With an energy focus, the PM (who holds the portfolio) has cleared 30 coal blocks from Coal India’s monopoly, though not all will be open to private sector. Mining is about more than coal and generating energy through coal-based power plants. There is iron ore/steel, bauxite and chromite too, often located in backward states like Orissa, Chhattisgarh and Jharkhand. There is a link between natural resources and economic development in backward regions, with multiplier benefits through domestic and foreign investments. However, beyond applauding PM’s switch in priorities, scepticism is in order.First, with the Left obstructing everything, UPA will shy away from pushing through necessary amendments in the coal nationalisation acts. Second, there will be resistance, some genuine, some imagined. States with iron ore will object to opening up and allowing iron ore exports to other states, insisting on location of steel plants within the state. There will be objections to greenfield plants in the Fifth Schedule (tribal areas), since leasing of tribal land to non-tribals is involved, raising constitutional and legal issues. With NGOs fanning the flames, environmental issues will also be dragged to courts. Plus there will be allegations about non-transparency in granting licences and compensation and rehabilitation issues. Some of these are genuine livelihood concerns. In the past, the PM has said that the opening up of coal mines had to wait for evolution of consensus. The point is that even now, consensus will not be readily forthcoming. If one scans the track record of the Indian GDP growth, what has been holding up growth (other than agriculture) is mining and quarrying. And there is also the power problem, a recent OECD report on India having flagged the need to auction coal mining leases to augment power generation.While the litany of problems is known, it was up to the Central government to generate consensus. Notwithstanding the PM’s announcement, we are far short from arriving at consensus, reflective of the UPA government’s disability to push liberalisation. All that has now happened, is the Centre (and one mustn’t ignore Sonia Gandhi’s remarks in China) has finally woken up to need for reforms. But it will still buckle to Left pressure.
