Millennium Post

Compounded economic woes

Compounded economic woes

Adding to the woes of the economy, the mining sector stares at more than a slowdown. Lakhs of jobs are on the line in the sector that was expanded in the April-June period of this fiscal. For mining and quarrying, the situation on the ground has been less than satisfactory. A contributor to India's GDP growth figure the first quarter of fiscal 2020, slowdown in the mining sector is expected to have a critical impact in the foreseeable future. Mining and quarrying was one of the only three segments that expanded in the April-June period, growing at 2.7 per cent against 0.4 per cent even as the overall GDP growth of the economy slowed down to a six year low of 5 per cent during the quarter. Federation of Indian Mineral Industries (FIMI) explains that a combination of factors like ban on mining activity in some states due to ecological concerns, lopsided policies, high taxation and with poor policy implementation, at least 2 lakh people have already lost their jobs in the sector while another 2.64 lakh jobs lie in danger. Judicial intervention in different mining regions has led to close-down or suspension of several mines, and subsequently caused considerable chaos in the mining industry. The result is ineffective regulatory mechanism. Goa is a prominent example where Court rulings have crippled the mining business and led them to shut down; at other places such as Karnataka, Odisha and Jharkhand, mines function at reduced capacity. Close to 2 lakh people are directly employed in these mines and their livelihoods are bearing the brunt of these bigger decisions. The number of livelihoods indirectly affected is nearly 10 times that of those directly employed. Rampant corruption and disregard to norms are equally responsible for the state mining sector is in today. The BJP government at the Centre in its first tenure tried bring in transparency in the system of allocation of mines by going for an open auction process instead of arbitrary allocation by state governments. This alternate method, however, is fraught with its own challenges. As per reports, in 2010-14, 494 mining leases were granted but post auction (2015-2019) none of the mining leases have been executed out of the auctioned 42 greenfield mineral blocks. Only 4 mineral blocks out of the 14 'C' category mines auctioned in Karnataka with pre-existing environment and forest clearances have been executed so far. The first half of next year will have an intensified scene when hundreds of mines in the country would come up for bidding. Expiry of tenure of 329 non-captive mining leases on March 31, 2020 is already warning of major unemployment. The closure of mines will hit production of about 50-60 million tonnes of raw material, mainly iron ore, and is expected to cause loss of about 2,64,000 jobs, direct and indirect. A criticism of the revised method of auctioning is that it is a very costly way of developing mineral resources and also leads to delays in mining. This is also said to create artificial scarcity in the economy and undo the scope to create new job opportunity in both mining sector and otherwise.

In the backdrop of this situation plaguing the mining sector, the opposition has raised a voice demanding probe in the mining leases. Congress's urge to CAG to bring out the bare facts which will spotlight the exact reasons for the slowdown in the sector. Political rivalries apart, the timely approach of checks and balances, if taken in the right spirit could help fix the situation. The present economic situation may be the exclusive responsibility of the incumbent government but the effects of this is born by all irrespective of regional or political affiliations. It is alleged that the BJP government has renewed mining leases without taking the auction route or levying additional costs. This is causing heavy losses to the exchequer. Congress has alleged that the law was changed with a retrospective effect and leases were extended for 50 years. Congress spokesperson Pawan Khera argued that the court must have found sufficient merit in the allegations as it has issued notice to the government. The plea has alleged huge donations to BJP by the beneficiary firms and asked for a CBI investigation into the renewal of questionable leases. Political donations received from companies whose licences have been renewed are an aberration to the allocation system in place. Technicalities of the matter point to the fact that the extent of irregularities has caused not just the mining sector to suffer but the economy at large is in shambles owing to numerous apparently segregated components critical for its smooth functioning.

On the surface, it is nabbing an opportunity, one political party firmed up to capitalise on the rival party's failings and for its position of responsibility, but besides the political drama and the mud-slinging that has unfortunately come to characterise common Indian politics, it is the bigger question of the vast India economy which has millions of dependents. In this looming threat to livelihood and material survival, the question of environmental degradation has become a secondary concern. But, as natures exemplifies, a balanced approach is the key to any smooth functioning.

Next Story
Share it