Depriving States of their riches

The National Mineral Policy does gross injustice to mineral-rich States, explains Saswat Panigrahi

The National Mineral Policy, 2008, which was recently tabled in the Rajya Sabha, has violated the interests of the five mineral-rich States -- Orissa, Rajasthan, Chhattisgarh, Madhya Pradesh and Jharkhand. These States do not have a mining policy of their own. They regulate their mining industries in concurrence with the Centre.

The concept of stand-alone mining, as stated in the NMP 2008, does not put emphasis on value addition within the State, thereby limiting its role in attracting investments. It has also reduced the scope for generation of employment opportunities and fetch of revenue for the State.

Going ahead with the Hoda Committee recommendations, the policy has suggested seamless transition from reconnaissance permit to prospecting licence and further to mining lease for bulk minerals, which would deny the State an opportunity to promote mineral-based industry within its boundary. Moreover, the policy has no provision for phasing out export of minerals and allowing captive mining for industries located within the mineral-based State. The policy also arrests the State's right to select the best applicants. In addition, it also usurps their security of tenure.

The National Mineral Policy assumes greater significance in view of its relevance in promoting the economy of the State where mineral activities are seen as a succour to hundreds of thousands of families.

Orissa, Rajasthan, Chhattisgarh, Madhya Pradesh and Jharkhand -- where agriculture is in a moribund condition -- are virtually eying to cash in on their mineral deposits. But these States have repeatedly been deprived from getting their due from the Centre on their mineral resources during the tenure of UPA Government. The States cannot even bargain on the royalty and export duty of various minerals provided by the Centre. Their share is merely confined to the current tonnage and quality based royalty, which are paying these States meagrely.

Orissa can be a case in point. It occupies a prominent place in the country's mineral map for its abundant mineral reserves. With 24.8 per cent of India's coal reserves, 32.95 per cent of iron ore, 59.95 per cent of bauxite deposits, 98.4 per cent of chromite and 67.6 per cent of manganese, Orissa can be named as the "mineral State" of the country. But the Centre is depriving it from gaining access to its fundamental mineral right. The State has been losing hundreds of crores of revenue due to the delay in revision of royalty on minerals by the Union Government. And the National Mineral Policy is yet another step to affect the economy of the State.

Orissa's Chief Minister Naveen Patnaik sees foreign hand behind the national mineral policy. "It seems to be heavily influenced by the international mining lobby which has recently earned huge profit due to favourable market conditions," Mr Patnaik said in the floor of the Assembly.

On the contrary, the Centre claims that the National Mineral Policy will attract investment to the tune of $250 million annually in the next five years. The policy harps on Foreign Direct Investment, which is its focal point. But the stark reality is that the over-emphasis on attracting FDI in mining will result in a situation where few multinational mining companies will bend upon the vast mineral resources of the country, which are essentially meant for the domestic consumption.

Mineral is a finite resource. It cannot be exported just for earning foreign resources. But the NMP speaks the other way round.

By depriving the States from getting their share from their own natural resources, the Congress-led UPA Government is playing politics over the wealth of the States and the nation as well. The move smacks of appeasing the foreign investors. By ignoring the States' concern, the policy violates the federal structure of the Constitution.

Ironically, the policy has been approved in principle by the Union Cabinet without addressing the concerns of the Chief Ministers of the mineral-rich States. The Centre's repeated negligence has disappointed the people, creating discontent among them. The dissonance is creating a louder din. The UPA Government will pay for it in the next general election, say political observers.

-- Published in the Oped page of The Pioneer on May 30, 2008