After
being off the radar of public attention for long, the
mining industry in India is now in focus. For example,
the controversies surrounding the Posco and Vedanta
projects in Orissa, involving the acquisition of large
tracts of land for mining purposes, had drawn attention
to the damage to livelihoods and ecology that mining
could result in. More recently in distant Karnataka,
allegations of the collusion between mining interests
and politicians in power, leading to large and not always
legitimate profits garnered at the expense of the local
people and the state exchequer, has led to the resignation
of the state's ombudsman. The mining sector is increasingly
seen as one in which the worst features of capitalism
as a profit machine combine with illegality and corruption
to provide a site for primitive accumulation based on
plunder and unequal exchange.
This is only partly because mining has delivered fortunes
to those private interests which after economic liberalisation
have been able to find a foothold in the industry. The
industry has also drawn attention because mining areas
have become the sites of violent political opposition
to both private capital and the state. Analyses of the
reasons for these developments point in many directions.
Displacement, loss of traditional livelihoods of tribal
populations and ecological destruction are, of course,
prime among them. In addition, in some regions and states
mining interests from ''outside'' reportedly rule the
areas they exploit by maintaining private armies or
by entering parliamentary politics to win influence
and control the administration of mining areas and the
framing and implementation of mining policy. Power at
one pole, especially if violently exercised, generates
dissent and opposition at the other, which too can turn
violent.
This kind of ''carpetbagger capitalism'' in which wealth
accumulation by ''outsiders'' who extract mineral resources
occurs at the expense of local populations, whose traditional
habitat and means of livelihood are damaged, is not
specific to mining in India. It is true of all locations
where the state has either not regulated mining firms
or interests or has even worked in their favour when
resources are being mined. Mineral resources are non-reproducible
and therefore the duration for which they can be exploited
is limited, and the returns from mining dwindle as the
best quality ores and the most accessible strains are
exhausted. On the other hand, for geological reasons,
individual mineral resources are concentrated in particular
regions of the world and in specific areas within those
regions and nations. Rising global demand, irrespective
of where it emanates from, therefore encourages the
quick exploitation of available mineral resources from
a few locations.
The difficulty is that in most cases mining, which requires
''extracting'' the resource, is destructive of the environment
in which it occurs. Large swathes of land have to be
excavated. If the area was forested it has to be cleared.
If it was inhabited, the local population has to be
relocated and rehabilitated. If water is required for
mining purposes, local water sources must be drained.
And if the process of mining releases toxic material,
ecological and human damage through pollution of various
kinds would occur, unless efforts are made to collect
those materials and put them to use or dispose of them
safely.
The dimensions of the problem are not easy to understand.
Consider the situation in India, for example. Taking
a national view, mining does not seem to be an overwhelmingly
important activity in the country. The mining and quarrying
sector currently contributes only around 2 per cent
to India's GDP. Further, more than 60 per cent of this
value is due to fuels, a significant share of which
is produced offshore, away from human habitation. Offshore
areas accounted for 18 per cent of the value of mineral
production in 2009-10. (Though, this seems to shift
the problem away from where it affects us humans, the
BP spill should remind us that even this is not true.)
The resulting seemingly minimal economic relevance of
mining conflicts with the role it increasingly plays
in generating discontent and opposition within the country.
However, the reasons why mining areas are the sites
for political conflict are many. To start with, where
the adverse effects of mining are inadequately remedied,
the consequences for the affected can be dire. Secondly,
though according to the Ministry of Mines, India produces
as many as 86 minerals, a few minerals account for a
dominant share of non-fuel mineral production. These
include coal, lignite and bauxite (in which India ranked
third among the world's producers in 2007-08), iron
ore (fourth) and manganese (fifth). Moreover, these
resources are concentrated in a few contiguous areas.
During 2009-10, while mineral production was reported
from 32 States and Union Territories, among onshore
areas a few states dominated: Andhra Pradesh (with a
12.24% share in production by value), Orissa (11.85%),
Chhattisgarh (9.18%) and Jharkhand (8.79%). Together
with the offshore areas they account for 60 per cent
of mineral production by value. They also are home to
large tribal populations. And they are among the states
where violent political movements are on the rise.
It is nobody's case that no mining should occur. The
case is clearly for restricting the extent of mining
keeping in mind the common good and taking account of
both immediate and long-term costs and returns. In fact,
almost everybody swears by certain principles. While
different mineral resources should be exploited to differing
degrees given technological options and the benefits
from production using mineral raw materials, the effort
should be to minimize the social costs. Ecologically-sensitive
areas should not be mined. Deforestation should be kept
to a minimum. Compensation, relocation and rehabilitation
must be organised in ways which are fair. And pollution
should be minimal after abatement.
However, recognising all this is not enough. There must
be laws, institutions and processes in place which ensure
that decisions with regard to the extent and means of
mineral extraction in different locations should be
taken in ways that ensures social participation, especially
of those who would be adversely affected. The fact of
the matter is that while lip service is paid to such
institutions and processes, they do not work in this
country (and in many others in the world as well). In
fact, the complex division of labour between the central
and state governments with regard to the framing and
implementation of mining policy obfuscates accountability
to a substantial degree, only worsening matters.
This has in recent years become more of a problem because
of the ways in which the post-1991 policy of economic
liberalisation and ''reform'' have affected the mining
sector. As noted above, mining is an area where most
costs are social and fall heavily on those not directly
involved in mineral extraction. If in such an environment,
private producers operating purely for profit are given
an important role, it generates the classic situation
where private and social returns diverge substantially,
especially when private returns are high and social
costs are not required to be compensated for.
This situation is relatively recent in India's post-Independence
history. During much of that period mining was largely
a preserve of the state. Under the Industrial Policy
Resolution, 1956, the mining of major minerals such
as coal, lignite, mineral oils, iron ore, copper, zinc
and atomic minerals, was made the exclusive preserve
of the public sector. It was only in the extraction
of minor minerals that the private sector was allowed
along with the public sector. As a result, much of mining
occurred within the ambit of the public sector. Even
today, the public sector continues to play a dominant
role in mineral production accounting for more than
70% of the total value of production.
It is of course true that the operations of the public
sector too resulted in displacement, ecological damage
and loss of traditional livelihood opportunities. But
with the public sector under managements which were
accountable to parliament, the degree to which it could
ignore social costs was limited. Moreover, with the
public sector not under pressure to privilege profit
above all else, it was in a position to provide for
compensation, rehabilitation and abatement. The system
was not inherently biased towards discounting the social
costs of mining operations. Under that regime, therefore,
the problem was largely one of inadequate investment
to effectively and safely exploit the mineral resources
of the country. In fact, even when shortages in some
areas encouraged small-scale illegal mining, it was
often more in the nature of petty production, sustained
of course by the presence and exploitation of large
trading capital.
Matters began to change in the 1990s, with the post-liberalisation
shift to the National Mineral Policy of March 1993.
Designed to encourage private investment in exploration
and mining, the policy opened up thirteen major minerals-iron
ore, manganese ore, chrome ore, sulphur, gold, diamond,
copper, lead, zinc, molybdenum, tungsten, nickel, and
platinum-hitherto reserved exclusively for the public
sector for private investment. Further, the policy expressly
provided for foreign technology and foreign participation
in exploration and mining. Initially, Foreign Direct
Investment was allowed, subject to clearance by the
Foreign Investment Promotion Board (FIPB), up to 50
per cent of equity (with no limit for captive mines).
However, additional FDI holding was provided for on
a case-by-case basis. In 1997, FDI up to 50 per cent
was taken out of the purview of the FIPB and put on
automatic approval route and in February 2006, FDI up
to 100 per cent was permitted in mining.
Though the initial response to liberalisation was lukewarm,
there has been a rush of investment into the area in
recent years. According to an estimate made by the Indian
Institute of Metals in 2009, a sum close to $300 billion
is expected to be invested in the metals and mining
sectors in eastern India over the next few years. This
is six times the aggregate investment made since Independence.
Much of this investment is to occur in the mineral rich
states of Orissa and Jharkhand followed by Chhattisgarh
and West Bengal.
The government has been arguing that this liberalisation,
introduced to attract much-needed investment into the
mining sector, has been accompanied by new rules, guidelines
and measures to ensure that the benefits are fairly
distributed. The opposition and civil society activists
on the other hand argue that there is no tooth to whatever
legislation is in place and little commitment to implementing
many of the regulations that are indeed available. The
state is most often seen as colluding with private operators
to further the latter's interests at the expense of
local populations.
As result, argue critics, in a state like Orissa, the
rapid pace of mineral exploitation has contributed little
to the development of the state. According to a study
by Banikanta Mishra (Economic & Political Weekly,
May 15, 2010), during the post-liberalisation period
from 1993-94 to 2003-04, the extent of mineral exploitation
has increased by 10.3% per year, with the value of minerals
extracted rising at 12.8% per annum. Much of this was
for export, with the quantity of mineral exported out
of the state rising by 15.7% per year. On the other
hand, the number of workers employed in mining had been
falling by 4% annually, even while ecological damage
and livelihood loss was worsening standards of living.
That there is basis for such cynicism is illustrated
by the delay in formulating and approving appropriate
alternative legislation to replace the Mines and Minerals
(Development and Regulation) Act of 1957. The Ministry
of Mines is pushing for legislation that mandates, among
other things, the sharing of profits from mining with
the local population and the state government. The new
law seeks to make sharing of at least 26 per cent of
profits with the local population mandatory. According
to reports, the law ministry influenced by other sections
in government is opposed to these changes. Union mines
minister, B.K. Handique, who has been quite vocal on
the matter, has reportedly received no response to his
efforts to get the draft legislation cleared and taken
to parliament.
Clearly then, the ethos of liberalisation that privileges
private sector production and celebrates profit-making
is one in which an appropriate mining policy would prove
difficult to formulate, let alone implement. Public
control over mining rights and mining activity in the
pre-liberalisation period was not driven by socialistic
motives, but by the recognition that a sustainable mining
strategy cannot be evolved when the activity is privately
undertaken. The retreat from an interventionist policy,
the evidence suggests, delivers the kind of outcomes
that enhances the wealth of some while increasing the
deprivation of the majority in India's mining belts
leading to violent forms of protest. The message is
clear. Liberalisation is not a means of increasing the
efficiency of the system. It is a policy that facilitates
a process of primitive accumulation that leads to social
disruption.
|
