Digging for reform

This newspapers ongoing analysis of the grip that the Reddy brothers of Bellary have over that mineral-rich district the local administration of which has been reduced to rubber stamps and,by extension,on the politics of Karnataka and Andhra Pradesh,has revealed how sordid are the by-products of laziness in addressing Indias most unreformed sector. Mining is not simply an essential component of Indias plans for the future,which will necessarily include massively ramping up infrastructure,and the increased demand for raw material that comes with that; the sector also stands at the intersection of some of the most fraught questions in Indias development. Not just the power of money in politics,and of crony capitalism as on display in Bellary but of Centre-state relations,and internal security more generally.

Indias laws regulating mining were enacted in the 50s. Their overhaul has been promised for years now; and yet a draft is not available,though it is said one will be introduced in this session of Parliament. Reports on the nature of the proposed law have been disquieting: most recently,that the government will only be able to auction mining rights for unprospected areas if there are no pending applications depriving the state of revenue,and once again setting up a system where cronyism is rewarded. This is not the sort of reform that is needed. What is needed is a system which incentivises prospecting,or the discovery of new resources; which ensures competitive bidding,and the consequent maximisation of state revenue; and in which a fair,sustained proportion of that revenue is available to those whose homes or livelihoods are displaced by the project. Those property rights must be respected; allowing instances like what was reported in The Financial Express on Wednesday,that French cement company Lafarge mortgaged tribal land in Meghalaya as security for a loan,will slow down reform and the sectors growth. Above all,complete transparency is essential; the state should remove itself from the process except as the conductor of auctions and as a regulator with a light touch. An independent environmental assessment agency is essential for this project.

As the Reddy brothers story shows,comprehensive reform will always run up against entrenched interests in states that have amassed enormous political clout. But although mining is supposed to be largely regulated from states,the constitutional sanction for that regulation clearly lays out that Parliament can intervene if it is expedient in the national interest. If cleaning up Indias murkiest and now,arguably Indias most politically fraught sector isnt in the national interest,what is?