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LATEST NEWS UPDATES | Tribals win share of mineral wealth by SPS Pannu

Tribals win share of mineral wealth by SPS Pannu

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published Published on Dec 4, 2010   modified Modified on Dec 4, 2010

Faced with a massive public outcry and fierce opposition from tribals, the government has, in a landmark move, decided to give tribals and other affected populations a share of the profits made from exploiting mineral resources from their land.

The Group of Ministers (GoM) headed by finance minister Pranab Mukherjee on Friday finalised the contours of the draft for a new mining bill, which makes it mandatory for mining companies to give 26 per cent of their net profit as compensation to locals displaced by the projects.

The mining firms will also have the option of paying a royalty to the affected persons - but this would have to be more than the 26 per cent net profit figure.

A senior official told Mail Today that a consensus had been reached on the issues involved and the finance minister said he would call for another meeting only if it is required.

He said the Chhattisgarh and Orissa governments have veered around to accepting the open auction route, allowing private companies to compete with public sector firms for mining activities.

A senior mines ministry official said the auction route would be followed for leasing out areas with known mineral deposits. It may not necessarily be followed for prospective exploration sites where the minerals are yet to be discovered.

Prospective mining areas for minerals such as gold, platinum, cobalt and zinc, which are found at depths of more than 50 metres, could be considered on a first-come-first-served basis, as it was essential to attract investment in these areas where no large discoveries have been made, the official said.

With Maoist violence flaring up in India's mining belts, the government decided to go in for radical economic measures to bring tribals into the mainstream.

The profit sharing formula forms part of the government's policy of going in for inclusive growth to ensure that the local population also benefits from economic development.

The Centre has also introduced a special development package to build more schools, hospitals and better roads for the violence- hit tribal areas.

The case for strong legislation to protect the rights of local tribals was further strengthened after Rahul Gandhi visited Niyamgiri in Orissa - the site of metals giant Vedanta's controversial bauxite mines and aluminium smelters - in support of the tribal cause.

The proposal of billionaire Anil Aggarwal- run Vedanta Resources to start mining in Niyamgiri was rejected by the Union environment ministry amid strong protests from local tribals, who consider a hill at the site an abode of their Gods.

Finance minister Pranab Mukherjee has taken the view that the solution to the country's socio- economic problems does not lie in stopping mining projects but in properly compensating people who are displaced.

Steel minister Virbhadra Singh, who is also a member of the GoM, was earlier in favour of giving public sector undertakings (PSU), such as the Steel Authority of India (SAIL) and NMDC, some relief on the proposal for sharing 26 per cent profit with local people as these companies play a wider role in local development compared to their private counterparts.

However, this suggestion was ultimately not accepted.

Coal minister Sriprakash Jaiswal was opposed to Singh's suggestion for giving some concessions to PSUs and came out in favour of a level playing field for PSUs and private players under the profit- sharing regime.

Leading companies, such as the Tatas and Jindals, had opposed the move to share 26 per cent of the net profit with displaced locals as it would hit profitability. They wanted to settle for softer terms such as contribution to local area development fund for the affected persons.


India Today, 4 December, 2010, http://indiatoday.intoday.in/site/Story/122117/Business/tribals-win-share-of-mineral-wealth.html


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