March 22, 2010 2:27:39 am
Consider three images. The first: of the Karnataka assembly,in chaos on Thursday as the states chief minister responds to allegations that the state is near bankrupt and that Rs 5,000 crore of mining revenue is being diverted. B.S. Yeddyurappa denies it; but everyone present knows that hes in a bind. Hes admitted that illegal mining is endemic in his state,but he cannot take down the Reddys of Bellary and their 40 MLAs. And,as this newspaper has demonstrated in a series of special investigative reports,it seems nobody else in Karnataka can,either.
The second: a map passed from hand to hand at various public meetings in Delhi last year,a map of districts in Indias hinterland. Marked on the left: deposits of coal,iron ore,bauxite. On the right: the areas where the anti-Naxal Operation Green Hunt was supposed to take place. You saw the overlap,understood the claim: that the Naxal threat and state response were inseparable from the extraction of natural resources.
The third: a full page advertisement in Variety,the insider Hollywood magazine,a few weeks before the Oscars. Avatar fever is at its height; and the ad begs James Cameron to speak up for the real-life Navi,a tribe in Orissa that consider the bauxite-rich Niyamgiri Hills sacred,some of whom are,in a sadly familiar pattern,gathering allies to ensure that the company that wants to dig them up cant touch them.
Are these not the three fears that most define our politics today? The fear that the power of money is growing in our politics,with licences and contracts that dwarf money-malas affecting our policy and politics in ways we cant quite understand. The fear that our approach to the grave threat the Naxals present is too soft,or possibly too hard. And the fear that the state will let private companies take our property or its converse,that job creation will stall as every large plant is held up by land acquisition agitations.
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And each of these fears finds its purest expression in one sector: mining.
Mining has always been about the land,and about exploiting it. Its industrial aesthetic hasnt fooled economists,who dont even classify it as close to manufacturing,but as a primary activity,like agriculture. And,unlike endlessly renewable agriculture,it cannot pretend to be anything but exploitative. You are always taking stuff out of the earth,and it doesnt grow back,either. But,even so,why does it serve as an attractor for every political and social neurosis weve developed? And can it be fixed?
The biggest reason why mining has become so much about politics,and vice versa,is that mining is still too much about government,and the wrong sort of government. Indias mining regulations were drafted in the 50s. So archaic are these that they dont even provide for auctioning mining rights. And,as was considered possible in the 50s,they call for checking in on licensed mines in a hundred different ways but each is subject to political and administrative discretion. As the Reddy saga shows,discretion becomes looking the other way when the leaseholder is powerful enough; and that becomes a reason to amass power,to capture the state capital,as the Reddys have.
So mining needs governance reform. As in so many other problem areas,the UPA got a very sensible committee to sit and write a very sensible report. The Hoda Committee submitted its recommendations in 2008,and a new national mineral policy was drafted that prioritised increased transparency,reinvented regulation,and the market mechanism. But,as always,these intentions have no legal force yet. A new mining bill is promised for this session; but it doesnt seem that it will go far enough. Heres the central problem: through the 90s,the licensing process was supposedly liberalised,but in a warped manner,in which practically unsupervised authorities in states handed out leases at non-market rates. Such a system is gilt-edged invitation to Reddy-style crony capitalism,to Koda-esque profiteering. And now the mining states will fight change tooth and nail. As Mines Minister Handique told this newspaper,even the first step ensuring that leases are sold through auction,not allotted discretionarily is not a done deal,because the states need to be brought on board.
Even beyond that,theres a failure of imagination. Why,for example,do we not question the system that claims that all natural resources belong to the state,and that mining companies can but take out a medium-term lease,for a few decades,while paying the state royalty? Or that they must in a classic piece of inexplicable,internally contradictory nonsense extract minerals while simultaneously conserving mineral wealth? Why should government control how much each mine is producing? None of this appears likely to change even in new legislation.
Yet this idiotic,contradictory set of instructions means that only those succeed who effectively ignore them. The pernicious state property-leaseholding-royalty system,for example,means that nobody is ever certain who has the right to mine where,which in turn means the Reddys can mine everywhere. It means the powerful can ensure that they are allotted a lease,and mine areas leased to others,as well; that their rivals have a low government-mandated output; that they themselves pay but a sliver in royalty as the price soars. Power does inevitably,if you will pardon the pun,undermine the system.
In the process,those with a claim to the resources,those who have lived in the area for generations,receive only handouts from big companies trying for PR,or mining strongmen playing politics. They cannot expect property rights over the land,because it belongs to the state. They cannot expect a solid flow of revenue,because thats set from the distant state capital. Dissent will only grow.
Reform is hard. In this case,it is also counter-intuitive. The Centre must ignore a crucial stakeholder: the governments of mining states. They are compromised by the royalty revenue,and by the power of mining barons. To address our three neuroses,we need a more transparent,market-driven system of auctions,ownership,and taxation; clear,continual,environmental regulation; and compensation for locals at market rates. And if the states will not let us have it,the Centre will have to cut them out of the loop.
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