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Why we dig clean mining

Even as it may not make everyone happy, the new mining Bill is the right way ahead.

india Updated: Oct 02, 2011 21:51 IST

This year is turning out to be a year of legislative upheaval even though the final lap of parliamentary approval of some of the important Bills is yet to happen. After the much-awaited Land Acquisition, Rehabilitation and Resettlement Bill, 2011, it is now the turn of the five-decade-old mining law to get a makeover. On Friday, the Cabinet approved The Mines & Minerals (Regulation and Development) Bill, 2011, which proposes auctioning of mining rights and a profit-sharing mechanism with the affected communities. It also mandates coal companies to provide 26% of post-tax profit for such communities - a move intended to pump in more money for the development of tribals who live in India's most resource-rich areas, including the ones affected by Maoism. However, there is a slight catch. While an earlier draft of the Bill talked of giving 26% direct ownership to the affected communities, under the new Bill, funds would go to the district's mineral fund and then disbursed. While auctioning of mines and the setting up of a regulator are positive signs that will promote transparency, what is making many queasy is that a new government layer at the district level may lead to further corruption. As for other minerals, the companies will have to pay a matching 100% of the royalty they will pay to states. Obviously, the mining companies (especially, coal) are not happy with this development, neither are their shareholders. Shares of mining companies fell on Friday after the Cabinet cleared the draft.

But coming days after the mining scams in Karnataka and Goa, the obvious question would be whether the Bill will curb these activities that lead to huge losses to the exchequer. According to some estimates, there are at least 80,000 illegal mines operating in India. Recently, after the Reddy Brothers, Goa chief minister D Kamat is also facing the heat for turning a blind eye to illegal mining. The Supreme Court recently instituted a panel to look into the scale of illegal mining that's not only destroying the states' environment but is also plundering the exchequer. A little comparison will be of help: the total area of Karnataka's Bellary district is 8,447 sq kms and it has 99 mining leases under operation. Goa is only 3,702 sq kms and has already 105 mining projects.

India needs its resources to grow. So mining is a reality. While it will be impossible to keep all stakeholders happy, the real challenge is to bring clarity in the sector. However, no law can promise a complete method to contain corruption. In the end, we return to the old chestnut: only good governance and quality implementation can minimise economic and environmental damage.