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LATEST NEWS UPDATES | A Mixed Bag

A Mixed Bag

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published Published on Oct 7, 2011   modified Modified on Oct 7, 2011
-The Times of India
 
The Mines and Minerals (Development & Regulation) Bill, cleared by the cabinet last week, signals that the government`s heart is in the right place. Under its provisions, coal firms must share 26% of their net profits with project area residents, while non-coal miners will have to provide them a sum equal to royalty paid to state governments. No system is in place at present to properly compensate mining-affected communities. So, there`s no faulting the intention to reduce popular resistance to mining projects by giving locals a stake in them.

What isn`t clear is how we`ll ensure that these funds don`t vanish into a black hole but truly help the targeted sections. The Bill says that district mineral development funds will receive the revenues for spending on local populations and area development. But let`s keep in mind that leakages blight our welfare delivery systems. Nor is politically blessed corruption in mining a secret. A technology-aided audit system must therefore ensure that money can be traced to its proclaimed developmental uses. And this expenditure-related data has to be open to online public scrutiny. Else, compensation funds risk being misallocated or misappropriated.

Moreover, addressing local misgivings in mineral-rich tribal areas ought not to mean making mining itself unaffordable. The sector is already highly taxed. By industry estimates of the Bill`s financial implications, tax incidence will rise prohibitively. Taken along with a proposed central and state cess, the cumulative costs can spook investors besides prompting firms to under-report profits. Company payouts reflected in increased prices of steel, power, etc, would also affect consumers. It makes for poor sense to hugely escalate the expenses of industry - which is hamstrung already by tardy land acquisition and lack of labour reform - while not doing enough to guarantee transparency and accountability in disbursal of compensation funds.

The Bill rightly makes way for states to grant mining concessions via competitive bidding, but stops short of making it compulsory. It`s likely to be a reform only on paper, with discretionary award of licences remaining an option. Raising punitive costs for illegal mining is a much-needed measure. As is the setting up of a national regulatory authority empowered to look into cases. This is necessary to help tackle the menace, more so in view of inadequate room for central intervention in checking rampant illegal mining in states despite its countrywide linkages and ramifications. Recently, government officials highlighted plans to use effective tools such as mandatory online registration of all mineral transactions - mining, sale, transportation, export - as well as use of satellite imagery to detect illegal operations. The quicker these ideas are implemented, the better. Finally, the government should consider ways, including through imposition of a levy and greater deregulation of local industry, to discourage over-export of precious resources at the cost of domestic users.

The Times of India, 4 October, 2011, http://articles.timesofindia.indiatimes.com/2011-10-04/edit-page/30242303_1_mineral-transactions-illegal-mining-mining-projects


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