Sunday, March 24, 2013

Who’s The one Joking out Here?

The new Profit Sharing Formula introduced by The Ministry of Mines has upset miners in India. While they contest that The New Legislation will wipe off The Industry, The Government Strongly Believes otherwise. Who’s The one Joking?

After having displayed a laggard approach on the need of a more contemporary mining policy for years together, the government appears to have woken up and has shown great urgency in bringing out a new mining policy that promises to address mining-related concerns of most stakeholders. The new proposal, titled ‘The Mines and Minerals (Development and Regulation) Bill, 2010’, is an amendment to the MMDR Act, 1957, and has been approved by the cabinet to be put before the Parliament.

The new legislation, as the government claims, aims to open up the country’s resources to foreign and local private investment and increase the benefits from mining to local communities. The contours of the new bill make it mandatory for mining companies to give 26% of their net profit as compensation to locals displaced by the projects. The goals laid out by the government in drafting the legislation are wide-reaching and, in some cases, do seem uncompromising. “We are trying to give enough options to the local community by giving them a recurring financial compensation. It’s not a compensation for their land, it is to enable them to do something different. We cannot, sitting in government or industry, decide somebody’s way of life. All we can do is empower them,” says S. Vijay Kumar, Secretary, Department of Mines. The expansion of mining in India is key towards maintaining the GDP and export growth of the country. In a recent interaction with a parliamentary panel, Mines Minister B. K. Handique asserted that the share of mining sector to the country’s GDP, which currently stands between 2.5% and 3%, is poised to increase substantially. To be exact, as industry movements suggest, it could contribute around 5% by the year 2020.

However, talking about the present, despite the geologically established presence of huge mineral reserves in the country, the current scenario of mining in India is rather disappointing. Considering that the mining and construction equipment industry volume is around 40,000 to 45,000 units per annum amounting to a turnover of $2.6 billion to $3.1 billion, the Indian industry is in its nascent stage as compared to the $75 billion global market. Moreover, as per official estimates, out of the 5.75 lakh sq km available in India with potential minerals, only 75,000 sq kms have been explored in detail so far. Not to forget, the battle between the mining companies and the people displaced by their projects have contributed in a big way for this poor show. While neither the existing spotty government mechanism nor the mining industry has been able to provide any relief to the lives of those affected by earlier projects, the question remains, will the new bill be able to resolve these battles?


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Posted by at
Labels: , , , , , , , , , ,