Safeguarding Resources from Custodians

The mining sector in the country has for long been subjected to systematic loot by the Executive. With the Parliament now passing the Mines and Minerals Development and Regulation (MMDR) Amendment Bill, 2015, hopes have brightened that this hitherto dark cupboard will at last see some light. It has been a cupboard full of skeletons, each uglier than the other. An unholy nexus of politicians, bureaucrats and industrialists have strangled the mining sector into near lifelessness, while lining their pockets more than handsomely. After the NDA came to power last year, it brought out an ordince to clean up this sector. It is this ordince that the MMDR Act has now replaced permanently. After its passage in the Lok Sabha, the bill was opposed by the Congress and Left parties in Rajya Sabha. Mining being a state subject, the Congress vociferously argued that the bill was a ‘threat’ to the country’s federal structure. With the rendra Modi government reaching out to allay the concerns of the Trimool Congress, Biju Jata Dal, Samajwadi Party and the AIADMK, the bill at last sailed through in the Upper House. The simultaneous passage of the Coal Mines (Special Provisions) Bill, 2015 along with the MMDR Bill now opens the door to the auction, grant of prospecting licenses and commercial mining of more than 200 cancelled coal blocks, along with almost equal number of mines producing minerals like iron ore, bauxite and manganese.

The MMDR Act has come about in the backdrop of the Supreme Court’s verdict last year, cancelling the ‘illegal’ allocation of 214 coal blocks between 1993 and 2011. The Central government had given away coal blocks for free to public sector and private companies with the logic of increasing coal production in the country. After all, the government-owned Coal India Ltd, which accounts for 80 per cent of the country’s total coal production, has failed miserably in meeting the growing energy needs of the country. But the Comptroller and Auditor General exposed the government’s logic to be fatally flawed, with coal being a limited tural resource that needs be used in optimum manner. Calculating the opportunity lost in terms of the average market price of coal, and taking into account only the coal blocks allocated to private companies practicing open-cast mining, the CAG estimated the loss to the exchequer to be a staggering Rs 1.86 lakh crores. The previous UPA government even questioned the CAG’s estimate in Parliament, in an obvious attempt to browbeat this Constitutiol functiory. Now the first round of auction of 19 coal blocks has proved that the CAG’s estimate of the country’s loss may in fact have been conservative. Nearly Rs 80,000 crore has been raised from the auction of just 14 coal blocks. The second round of auction has 43 blocks on offer. The government expects to raise Rs 15 lakh crore from the new bidding process.

Successive governments at the Centre and mining states have overseen a highly irregular mining process since the origil Act was ected in 1957. Mines were allocated to companies which had lost out in the bidding process, with the courts suspecting underhand dealings between such companies and corrupt sections of the administration. Enormous scams in the mining sector have regularly hit the headlines. Five years ago, the Rs 60,000 crore illegal iron ore mining and export scam in Kartaka led to the resigtion of the then Chief Minister B S Yeddyurappa. Illegal allotment of iron ore and coal mining contracts in Jharkhand blew up into a Rs 4,000 crore scandal, leading to the arrest of former Chief Minister Madhu Koda. Mafias hand-in-glove with state administrations are illegally mining sand and stone in the Ganga riverbed in Uttarakhand, extracting minerals in the Aravalli range extension in Harya, stealing iron ore in Madhya Pradesh and Andhra Pradesh, digging up marble in Rajasthan. The Northeast too has not been immune from this malaise. Big cement firms have illegally mined forested areas in mineral-rich Jaintia Hills of Meghalaya while coal from Aruchal, Assam and Meghalaya are illegally dug and black-marketed. According to Article 39 of the Constitution, the government is the ‘custodian of tural resources, and as a trustee it is supposed to facilitate the utilisation of tural resources in the best possible manner in larger public interest’. So far, the government has failed in this duty, thereby benefiting selected private companies. It is hoped that the new Mines Act will fulfill its aims to bring about transparency in this sector, empower mining states and provide them revenue, use part of the profits for local and tribal welfare, introduce modern technology and address environmental concerns suitably.