Is Modi Government Planning on Selling State Govt. Owned Mineral Resources to Corporates?

News Click | Ayaskant Das | Feb 17, 2021

A draft notification by the Ministry of Mines says mineral blocks not auctioned by state governments can be auctioned by the Centre.

New Delhi: In an attempt apparently aimed at helping corporate houses appropriate a greater pie of natural resources of the country, the Modi government has proposed a law whereby the Centre can auction mineral blocks that belong exclusively to states. On February 9, the Union Ministry of Mines had issued a draft notification proposing a series of mining reforms, including the transfer of rights to auction mineral blocks to the Central Government.

The Mines and Minerals (Development & Regulation) Act, 1957 will be amended to “provide the power to central government to conduct auction (of mineral blocks) in cases where the State governments face challenges in conduct of auction or fail to conduct auction”. Among other reforms, the government has proposed to allow commercial trading of up to 50% of coal extracted from blocks allocated exclusively for captive mining. The Centre has also sought to do away completely with the mandatory requirement to conduct fresh assessments and obtain new clearances whenever successful new bidders take over mineral blocks from old leaseholders.

Even though the draft notification makes it amply clear that all proceeds from auctions of mineral blocks by the Centre will fully accrue to respective state governments, it is being claimed that the proposed legislation undermines the federal structure of the country: state governments not only own minerals (except coal and uranium) but are also fully empowered to decide when and how to utilise those resources.

Experts have questioned the intention of the Central Government in bearing the costs and rigours of the auction process if all proceeds will ultimately accrue to state governments. “State governments are trustees of mineral resources. They can use the power at their disposal to auction mineral blocks in accordance with their own needs,” said senior Supreme Court lawyer Sanjay Parikh.

The ministry has justified its proposal to take over the power of auctioning all blocks on the grounds that state governments have displayed tardiness in selling minerals. The notification stated that Central Government exploration agencies have – since the year 2015 – handed over geological reports for 143 mineral blocks which are ready for auction to various state governments.

However, only seven blocks from this list have been auctioned so far. The draft notification also stated that leases of 334 mineral blocks, out of which 46 were working mines, expired in March 2020. However, despite repeated prodding by the Centre, only 28 of those blocks had been auctioned by the states so far, it said. The idea to auction a greater number of blocks on a regular basis has been justified on the basis of the assumption that this will ensure continuous supply of minerals in the country. It has further been reasoned that a delay in conduct of auctions has a substantial impact on the availability and prices of minerals.

“Where will the concept of inter-generational equity go if all mineral resources are auctioned together? Mineral resources have to be extracted in a very reasonable manner in accordance with our requirements. Otherwise it will lead to zero balance of resources for future generations. In the past there have been instances of fake letterhead companies buying over coal blocks even if those firms had no involvement in manufacturing activities of any nature. Immediate and wholesale auction of mineral blocks will result in precious natural resources going under the control of only those corporate houses who not only have very deep pockets at the moment but also have the power to compete for bids. There will be manifold adverse impacts on the local environment too if, by any imagination, all mineral blocks are subjected to extraction at the same time,” Parikh told Newsclick.

It has been speculated that any attempt by the Centre to take over powers of state governments, as far as ownership and management of mineral resources are concerned, will be vehemently opposed. In the wake of an attempt by the Central Government to undermine federalism, which forms a basic structure of the Constitution of India, it is likely that state governments would challenge the amendment in court, thereby resulting in a complete derailment of the mineral block auction process. On the other hand, an alternative exists for the Centre in the form of extending assistance to states for conducting e-auctions, which is a faster and cost-effective process if at all there exists the need to sell more mineral resources.

In the proposed amendment to the Act, a provision has also been made to allow leaseholders of captive mines to sell up to 50% of minerals extracted in any particular year, after meeting end-use requirements, provided that an additional royalty, as prescribed by the Central Government, is paid. In continuation of this provision, captive coal block leaseholders will now be able to use 50% of extracted minerals for commercial trading. This proposal has been justified by the Centre on the assumption that it will reduce the import bill of coal and help bridge India’s trade deficit.

“There are numerous thermal power plants in India that have been designed to operate only with imported coal. Many plants are strategically located along the country’s coastline for easy availability of imported coal through the sea route. These plants can never switch to domestic coal. Further, there is no reason why the government should charge additional royalty for coal (or any other mineral) that is commercially traded after meeting end-use requirements. It will lead to an artificial increase in the cost of minerals and the burden of additional royalty will ultimately be transferred to the consumer. This goes against the spirit of Atmanirbhar Bharat. If at all, the government should withdraw all captive conditions from upon existing leaseholders,” said R.K. Sachdeva, former advisor (Coal) to the Government of India.

In March last year, soon after a total lockdown was imposed across the country on account of COVID-19, the Central Government had issued a notification giving a two-year holiday for new mining leaseholders wherein they could continue extracting minerals on the basis of old clearances provided they obtained new clearances by the year 2022.

The new draft notification proposes to completely do away with the requirement of obtaining new clearances: the old set of clearances can be used by new leaseholders till all resources are exhausted in the mineral block. It stated that new leaseholders are “facing difficulties” in obtaining fresh clearances which not only happens to be a “lengthy process” but is also “time consuming”.

“The proposal that no fresh clearances are required for new leaseholders is pro-industry and pro-development. Any break in mining operations for the sake of new clearances would have led to a discontinuity in business. Mine operators would have had to begin the entire exercise afresh after getting new clearances. It would have become difficult for mine operators to find ore again,” added Sachdeva.

Sections of the industry have welcomed the move to continue extraction on the basis of old clearances even though those pertaining to environment and forests are not within the domain of the mines ministry.

“An environmental clearance, once granted, is valid irrespective of change of ownership of a mine. But consent for establishment and operations have limited validity and need to be renewed periodically. These cannot be bypassed. Further, any mining plan approved by the Indian Bureau of Mines does not come with a lifelong validity. It has to be reviewed every five years. Each project proponent has to submit mining plans for the next 20 years, including a closure plan. The Indian Bureau of Mines reserves the right to revoke a prior approval in the event of deviations from the original plan,” said Rebbapragada Ravi of mines, minerals & PEOPLE, an alliance of individuals, institutions and communities affected by mining.

Questions have also been raised about the issue of the safety of workers engaged in mining activities while allowing continuous extraction on the basis of old clearances. Shouldn’t safety standards be reviewed periodically as leaseholders dig deeper into the earth to extract minerals? The Directorate of Mines Safety reserves the right to cancel operations in the event of safety norms not being followed properly or being violated intentionally.

Further, there exist a certain set of mining clearances that are granted by state governments including handing over of the lease itself, through agreement, by the respective Directorate of Mines & Geology. “If there is any change in ownership, the new leaseholder has to sign a fresh agreement with new terms and conditions. This includes the amount of royalty and also the issue of mining permits at regular intervals. Any extension of mining lease or change in ownership has also to be done through issue of government order by the concerned department which cannot by bypassed,” added Ravi.

Need to prioritise sustainable living to protect planet: expert

The Hindu | February 15, 2021

‘Planned urbanisation in countries such as India could serve as a great adaptation method’

Climate change and urbanisation are two of the most important phenomena facing the world today and they are inextricably linked, observed Fulbright fellow in Environmental Studies at Yale University (USA) Suman Chandra.

She participated in the discussions during the national webinar on ‘Climate Change Adaptation: Traditional Wisdom and Cross-Scale Understanding,’ jointly organised by GITAM School of Gandhian Studies and United States India Education Forum (USIEF), here on Monday.

She pointed that India ranks fourth in the list of countries that produce highest greenhouse emissions and this could be a result of massive urbanisation.

Ms. Chandra, who earlier served as District Collector of Buldhana district in Maharashtra, emphasised that we are on the cusp of a rapidly changing world and we need to prioritise sustainable living and make it a part of our lifestyle in order to protect the planet. She suggested that a planned urbanisation in countries such as India could serve as a great adaptation method.

A. Rama Mohan Reddy, former forest service officer, who extended his services in the Himalayan region, focussed on the impact of climate change on forests which include frequent fires, unforeseen floods, untimely flowering of various plant species and the likes. He also spoke about various measures taken by the Forest Department to mitigate the long-term effects and to improve forest cover.

Visakha Society for Protection and Care of Animals (VSPCA) member Priya Tallam spoke about resilience in coastal communities and various activities undertaken by the VSPCA towards the betterment of the ocean and the marine life along the coast of Visakhapatnam.

The panel of speakers included IIM (Ahmedabad) Professor Rama Mohan Turaga, Samata Executive Director Ravi Rebbapragada, Ashoka Trust post doctoral research associate Vikram Aditya, Tata Institute of Social Sciences (TISS) researcher Bijayashree Satapathy and Stanford University researcher Krti Tallam.

No plan to increase coal royalty for Odisha: Union minister Pralhad Joshi

The New Indian Express | Feb 11, 2021
The Centre has made it clear that there is no plan to increase royalty on coal and non-coal minerals for states like Odisha.

BHUBANESWAR: The Centre has made it clear that there is no plan to increase royalty on coal and non-coal minerals for states like Odisha. Replying to a question from Sasmit Patra (BJD), Union Minister for Coal and Mines Pralhad Joshi told Rajya Sabha that at present, states concerned are collecting royalty at 14 per cent (pc) ad-valorem on price of coal.

In addition, contribution towards District Mineral Foundation (DMF) at 30 pc of the royalty in respect of mining leases granted before January 12, 2015 and 10 pc on or after January 12, 2015 is also being collected by the states.

The Minister said due to ad-valorem nature of rates of royalty, there is increase in revenue to the coal producing states as and when price of coal increases. The decision has been taken basing the report of a study group constituted on July 21, 2014 for examining the issue of revision of royalty rates on coal and lignite.

The study group had submitted its report suggesting no change in the rates of royalty which the Centre accepted, he said. Chief Minister Naveen Patnaik during a virtual meeting with Joshi and Union Minister Dharmendra Pradhan in December 2020 had made a strong plea for revision of royalty for coal and non-coal minerals.

Sundargarh DMF fund finds way to non-priority sectors

The New Indian Express | Jan 16, 2021

When it comes to using the District Mineral Foundation (DMF) fund, Sundargarh district appears to have a soft corner for Rourkela.

ROURKELA: When it comes to using the District Mineral Foundation (DMF) fund, Sundargarh district appears to have a soft corner for Rourkela. The DMF guidelines are clear about priority and non-priority areas but DMF funds find their way to the Steel City which is neither directly nor indirectly affected by mining, a criteria for spending the funds.

Last year, when Rourkela Police unveiled a fleet of 25 brand new Innova Crystas to patrol the roads of Rourkela, eyebrows were raised because the multi utility vehicles were procured using 4.65 crore from the DMF. Of the 25 MUVs, 20 are meant for Rourkela while five are deployed in Bonai sub-division. Interestingly, before that the district administration is learnt to have spent 25.52 lakh from DMF pool for what it called ‘engagement of police patrolling and traffic management’ for Rourkela city, reveals information secured through RTI. How the new vehicles helped police intensify patrol is another story, given the spate of crimes that rocked the Steel City last year.

RTI activist Rashmi Ranjan Padhi citing the RTI reply said the administration spent ` 25.52 lakh towards ‘engagement of police patrolling and traffic management’ in Rourkela Municipal Corporation (RMC) limits but details were not provided, not even year of expenditure. However, reliable sources informed that the expenditure was incurred during 2017-18 towards hiring of police patrol vehicle for Rourkela.

“Rourkela city is not directly or indirectly affected by mining operation. Besides, using DMF on swanky MUVs and police patrolling makes very little sense,” said Padhi, who also is former Secretary of Odisha Pradesh Congress Committee (OPCC).As per available information, the total collection of Sundargarh DMF stood at 2,133.27 crore till June 30, 2020. Till then, at least 2,094.12 crore was spent or work orders awarded against 3,672 projects. Padhi claims that many of the spendings do not comply to DMF norms.

The mineral foundation released 78.56 lakh towards construction of main gate, boundary wall and 30 shops at Madri Kalo Bhawan of Sundargarh town. Similarly, approval was given for 64.99 lakh towards construction of boundary wall of a truck terminal at Amlipali in Sundargarh town in February 2019. In July 2020, ` 49.12 lakh was sanctioned towards raising of boundary wall and barbed fencing of Circuit House of Sundargarh town. Sundargarh Collector and DMF Chairman-Cum-Managing-Trustee Nikhil Pawan Kalyan did not reply to written request for comment.

Where is the DMF money meant for people living in mining areas going?

Mongabay | Mayank Aggarwal | 14 January 2021

In 2015, the Indian government introduced a mechanism for establishing the District Mineral Foundations (DMF) which were to drive developmental work in the mining-affected areas.
Over Rs 400 billion have been collected in the fund so far but the implementation remains poor with civil society leaders and experts complaining that transparency in use of this fund and involvement of local communities is missing.
Experts advise that for the DMF mechanism to succeed, districts must focus on the delivery of services rather than a spree of creating only infrastructure, engage local partners for implementation and focus on livelihoods based on natural resources to improve the local economy.
In Madhya Pradesh’s Singrauli district, one of the biggest and most polluted coal mining and thermal power hubs in the country, funds meant to drive development for the people living there, have been used for the construction of an air-strip. For communities that have been bearing the brunt of mining pollution, development in the form of a space for aircrafts to land, reflects the imbalance between the purpose and implementation of the District Mineral Foundation (DMF) funds.

DMFs were introduced in January 2015 by the government of India in all districts in the country affected by mining-related operations. The provision was hailed as a golden pill for the upliftment of such areas. Now, six years later, it has failed to deliver on its promise and is stuck in a bureaucratic- and politician-heavy approach.

The provision was brought through the Mines and Minerals (Development and Regulation) Amendment Ordinance, 2015 which called for establishing the DMFs in all mining-affected districts and using funds collected under this for the welfare of people of such areas. It was followed by the government, in February 2015, introducing the Mines and Minerals (Development and Regulation) Amendment Bill, 2015 to amend the 1957 version of the law in Lok Sabha which passed it in March 2015.

In September 2015, the government notified the rates of contribution payable by miners into the DMFs. It said in case of all mining leases executed before January 12, 2015, miners will have to contribute an amount equal to 30 percent of the royalty payable by them while in case of mining leases granted after that, the rate of contribution would be 10 percent of the royalty payable.

Following this, by now, the DMFs have been constituted in 574 districts in 21 states with about Rs. 41,650 crore (Rs. 416 billion) till September 2020.

The exact composition and functions of the DMFs were to be decided by the state governments but the amendment of the law had specified that use of this fund has to be in line with the provisions of the Panchayats (Extensions to Scheduled Areas) Act, 1996 and Forest Rights Act, 2006. Experts and civil society leaders note that it has not been the case.

Srestha Banerjee, who works as the natural resources programme lead with the International Forum for Environment, Sustainability and Technology (iForest), a think-tank working on environmental and sustainability issues, noted that government’s approach to ensuring the use of the money available under the DMF mechanism is top-heavy where the trusts responsible for their use are dominated by officials and politicians.

“This packing of the DMF body with politicians and officials who are to take decisions on how the DMF money should be used, with little representation of the local people ensures that the true spirit of the DMFs is not reflected in the projects that are decided in mining-affected areas. The idea enshrined in the law related to DMF was to ensure that it is used for the welfare of ming affected communities, including tribal and forest-dwelling communities, by including them in the decision-making process. The law thus required DMFs to function in line with our Constitutional provisions as related to Scheduled areas, the FRA and PESA. But that has not happened and that is among the biggest problems of the DMF so far.”

Chinmayi Shalya, an independent researcher, who has worked on the issue of DMF, said “DMF is a very special fund” as it was “created to benefit a specific section of people – the mining-affected communities” and because “it is not tied to any specific scheme or specific area of work.”

“The fund does not lapse at the end of a financial year, like many other funds. It keeps accumulating in the DMF Trust account. These provisions give a huge scope to plan its use for more than what other schemes provide for, improve and expand upon what already exists and innovate beyond that as well,” Shalya told Mongabay-India.

In India, the share of the mining and quarrying sector is less than two percent of the country’s gross domestic product right now but the government aims to at least double by 2023. Without effective transition policies, ambition could negatively impact the communities living in and around mining-affected areas.

In many mining areas across the country, the lives of the affected communities and biodiversity including forest and water bodies have undergone a transition for the worse. People are facing pollution of their natural resources and their agriculture yield has been impacted. The development that was promised to them in lieu of minerals being extracted from their land has not reached them.

The governments have realised that the transition of mining areas has not been ‘just’ for many people. In December 2020, while speaking at a function of the Confederation of the Indian Industry, Chairman and Managing Director of Coal India Limited Pramod Agrawal said that in order to help grow the mining activity, it needs to be sustainable through reducing air, water pollution and reducing the carbon footprint.

Funds under the DMFs were meant to bring a positive transition in the lives of such communities but the programme seems to be derailing.

The use, misuse and abuse of the DMFs
The years gone by are in fact a witness of many stories of DMF’s use, misuse and abuse.

For instance, Rajesh Tripathi of Chhattisgarh-based Jan Chetna Manch, a social group working for the mining-affected people, said over Rs. 250 crore (Rs. 2.5 billion) were collected for Raigarh district under the DMF-related provision but there is no transparency on how it was used.

“According to DMF rules, the funds collected were to be used for the benefit of mining-affected people but a major portion of this fund has been used in other areas of the district which have nothing to do with mining. It happened because the bodies that are tasked with use of this fund are headed by a legislator of that area,” Tripathi told Mongabay-India.

He said these bodies driving the use of DMF funds are led and controlled by politicians and district administration with zero participation of the locals who have no idea about this fund. “There is absolutely zero transparency and accountability. When we sensitise villagers about it we realise that no work has been done by the government to spread awareness about this fund among villagers,” Tripathi said.

He emphasises that the DMF implementation mechanism talked about provision of conducting a social audit of the works granted under it. “In Raigarh, about 950 projects were sanctioned and of that, about 450 have been completed but their social audit has not yet been conducted,” said Tripathi.

Chinmayi Shalya said, “Currently, most of the DMF use across mining districts in the country shows that the fund is used mostly for physical infrastructure for which other departmental funds are available.”

“This shows a lack of planning or even a basic need-assessment at the district level for optimal and effective use of DMF funds. There is a glaring lack of attention towards improving the well-being of mining-communities through better investments in healthcare, nutrition, availability of clean water and creating income security,” she said.

Shalya cited a recent example of Madhya Pradesh’s Singrauli district, one of the biggest and most polluted coal mining and thermal power hubs in the country, where a part of DMF funds was used for the construction of an air-strip.

“This is brazen misuse of a fund meant for communities which have been bearing the brunt of not only poor amenities and facilities, but also saddled for generations with effects of air, water and soil pollution,” she said.

However, there are some good examples as well that shows how the fund can be used constructively.

“For instance, Keonjhar and Sundargarh districts in Odisha have used DMF funds for local livelihoods through millets … they are using the produce to add millet-based foods in the ICDS (Integrated Child Development Services) scheme for better dietary diversity and nutrition. Bijapur and Dantewada districts in Chhattisgarh set up IPHS (Indian Public Health Standards) compliant hospitals with full staff and doctors through the DMFs,” she noted.

In fact, in August-September 2020, the central government proposed mining reforms that talked about the use of the DMF fund for creating tangible assets in mining-affected areas – something that experts criticised stating that this will be misused and the mining-affected communities will be deprived of this money.

Poor participation of mining-affected communities
One of the main reasons highlighted by experts in the proper use of the DMFs funds is that the money spent is being decided by bodies packed by bureaucrats with negligible participation of local communities.

Amarendra Das of the School of Humanities and Social Sciences at the Indian government’s National Institute of Science Education and Research (NISER), explained that the issues with DMF are multifaceted. “The money under the DMF was supposed to be used by the local bodies in villages and districts in accordance with their needs. But the process is hampered by bureaucracy, who instead of allowing the usage of funds in a decentralised manner, is pushing big projects on block and district level.”

“For example, rather than every village having their own drinking water system or local interventions that generate local employment and involve local decision making, the officials are calling for mega drinking water projects which get stuck on one level or another, decided without the involvement of villagers and devoid the locals of work and earning opportunities. Many times such projects get stuck and remain incomplete,” Das told Mongabay-India.

“There is a clear problem of mismanagement as a result of which, the mining-affected communities don’t get the benefit of the fund that was collected after taking away their resources,” he said.

DMF funds may not be reaching mining-affected communities
Of the Rs. 416 billion collected under the DMFs (till September 2020), about Rs. 177.66 billion have been spent. But experts note that the money is not being spent in conformity with the idea it was created for.

iForest’s Srestha Banerjee remarked that the “DMFs are operating with little knowledge of people who are the beneficiaries, even as data related to the funds under it etc was supposed to be shared with the public at large.”

“So far, most of the states and districts have failed to optimize the opportunity to address the injustice with the mining-affected communities. DMF is being treated as any other development or infrastructure fund while it is far beyond that. The spirit of DMF is natural resource benefit sharing. ” she said.

Chinmayi Shalya said for DMFs to function effectively, the decision making “needs to involve mining-affected people, the directly affected areas and affected people need to be clearly identified and notified.”

“A long-term planning exercise needs to be mandated so that funds are used wisely and no duplication with other schemes happens. Districts must be equipped with resources and expertise to plan effectively and improve upon and go beyond the existing public welfare schemes. Awareness and capacity of local communities should be built to partake in decisions and monitor the works under DMF,” she said.

She stressed that for the DMF mechanism to succeed, districts must focus on the delivery of services rather than a spree of creating only infrastructure, engage local partners for implementation. Livelihoods, with a focus on natural resources like forests, agriculture etc, as they will be key in improving local economy and incomes.

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