Ministry for dilution of pro-poor clauses

The mines ministry wants to dilute the pro-poor provisions of the mines and minerals development (regulation) bill on the ground that it will make mining unsustainable.

Updated on: Jul 6, 2011, 23:13:07 IST

Hindustan Times | By Chetan Chauhan, New Delhi

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The mines ministry wants to dilute the pro-poor provisions of the mines and minerals development (regulation) bill on the ground that it will make mining unsustainable.

In a proposal to be considered by a group of ministers (GoM) headed by finance minister Pranab Mukerjee on Thursday, the ministry wants to do away with 26% profit sharing clause and replace it with 26% royalty on mining.

The money collected from the mining companies will be given to district mineral foundation for carrying out development works for the locals affected by mining.

In a GoM meeting in December 2010, it was decided that mining companies will share 26% of their profit with the foundation but Planning Commission deputy chairperson Montek Singh Ahluwalia and steel minister Beni Prasad Verma opposed the decision.

Ahluwalia in a note to mines ministry said the move would "discourage future investment in mining" and will make the business unsustainable. He suggested that in place of profit sharing the scale of compensation to locals should be clearly laid down.

"More importantly, there is no guarantee that this expenditure will be additional since the state governments can divert resources they would have spend on the district to other areas," he said, while expressing reservation over the bill.

Agreeing with Ahluwalia, Verma in March 2011 said that calculating profit from an individual mine of a company will be difficult and the provision will not be implementable.

He also said that if the 26% profit clause is incorporated it will lead to import dependence as the domestic mining will become economically unviable.

Verma suggested sharing should be royalty based and the provision should be applicable to all sectors where companies acquire land.

The profit sharing clause had divided the GOM.

Three cabinet ministers Jairam Ramesh, P Chidambaram and Kanti Lal Bhuria wanted 26% profit sharing clause whereas opposed to Ahluwalia, Verma, commerce minister Anand Sharma and coal minister Shriprakash Jaiswal opposed it

Supporting the majority GoM view, the mines ministry in a proposal for GoM argued that the "profit calculation is difficult and accounts can be fudged".

It also said the money contributed in the district fund based on profit may be beyond the absorption capacity of the districts.

As per the ministry's estimate, five public sector mining companies will have to give Rs 3,666 crore every years to district mineral foundations. In case the royalty clause is accepted, the money will fall to Rs 1,200 crore.

"Earmarking funds based on royalty can also help in preventing illegal mining," the mines ministry said, while seeking the change in the proposed bill.

Other changes being proposed
The cess to be charged by the state and the Central governments should be halved to five% as against original provision of 10%

Reason: Modernization of state mineral directorates is because of local of will power rather than resources

Central government's permission to be mandatory for mining of 10 major minerals

Reason: To ensure important national resources are not over-exploited

ABOUT THE AUTHOR
Chetan Chauhan
Chetan Chauhan is the National Affairs Editor looking into all aspects of news and features from across India. A Chevening scholar with over three decades of experience in reporting and news management, Chetan has extensively covered all important aspects of the social sector, political economy, environment and climate change nationally and internationally. He did a journalism course at the Reuters Institute of Journalism in Oxford and Digital Media training at Nanyang Technological University in Singapore. He started as a reporter with The Statesman in 1996 and joined the Hindustan Times in 2000 in the metro bureau covering environment, crime and Delhi politics. He covered hot local news, from the Jessica Lal murder case to the rebellion of Delhi Congress MLAs against then Chief Minister Sheila Dikshit, to the replacement of toxic vehicle fuel with cleaner compressed natural gas (CNG) in the national capital. Some of his stories on air pollution became part of the Supreme Court’s landmark MC Mehta versus Government of India case in the National Capital Region (NCR), forcing the government to take corrective measures. As part of the national political bureau since 2004, he covered important central sectors such as environment, education, social justice, labour, rural development, water resources, renewable energy, agriculture, broadcasting and the Planning Commission for more than a decade producing several exclusive and investigative breaking stories. His specialisation is the environment, having covered at least a dozen United Nations global conferences on climate change, biodiversity and wildlife including climate summits in Paris, Copenhagen and Bali. He also covered India’s two five-year plans ---11th and 12th and reported on drafting and execution of right based laws such as Right to Education, Right to Information and rural job guarantee law, MG-NREGA, now being introduced in new format as VG-RAM-G Act. He has in-depth knowledge of social sector issues. He was one of the first to report on tigers vanishing from Sariska and Panna wildlife reserves in 2004 and 2008, respectively, leading to the setting up of the National Tiger Conservation Authority (NTCA) and the introduction of stringent penal provisions for poaching. He has written extensively on the rising human-animal conflict in India and the degradation of India’s biodiversity hotspots because of mining and other activities. Since 2004, Chetan has covered Parliament comprehensively and participated in training on the nuanced coverage of Parliament proceedings. He has travelled extensively across India to cover national and provincial elections since 1998, especially in the Hindi heartland states, considered India’s road to power. He writes a regular column for Hindustan Times, Ecostani, on important national politics, economy, Himalayan ecology and environmental issues. His other responsibilities include providing inputs for edits and edit page articles for the publication, apart from managing news flow from across India.Read More

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