Ore issue

The department of commerce has proposed canalisation of exports of iron ore with ferrous content of over 55 per cent through state-owned MMTC. Any canalisation through a single agency smacks of licence-permit raj and its attendant risks of handing over control in the hands of a few inspectors. This goes against the grain of the larger reform agenda that India has embarked upon.

With a sharp rise in global iron ore prices,exports have brought windfall to miners over the past few years. This in turn prompted many to extract a lot more than permitted by various government agencies. Illegal mining,besides robbing the state government of royalty receipts,causes huge environmental damage. The commerce department believes canalisation will stop illegal mining,but its naive to think so. So is the finance ministry that thinks increasing export duty will address the issue. Higher duties are good for the government since it enriches the exchequer,but do little to curb illegal mining except reduce the profits of miners a bit.

To curb illegal mining,the country needs a strong Indian Bureau of Mines IBM,the mining regulator,and an effective monitoring mechanism at the state level. It is for the IBM to ensure that miners do not extract more ore than what they specify in the plan they submit. At present,the Nagpur-headquartered IBM is a toothless regulator,with not even enough staff to conduct visits. Its penalties,if any,have hardly served as a deterrent to miners. The less said about the monitoring mechanism in states,the better. It is only after the Justice Santosh Hegde committee report and the Supreme Court crackdown in Karnataka following rampant illegal mining of iron ore that the state government got into the act. Intermittent check posts with weigh bridges to prevent overloading of ore in trucks,clamp down on fake transport permits,and electronic systems to track movement of ore are some measures Karnataka has taken. Till all states do this and IBM stands up to purpose,canalisation and export duty are ad hoc,interim measures.