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Way out of the mining imbroglio

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Mining, like defence contracts, is prone to corruption. Extracting resources from the ground does not lend itself to the usual rules of competition. A mine is a natural monopoly and the state, which gives the right to mining, is also a monopoly. The two come together in the backroom and you get crony capitalism. What is the answer? It is not to focus on individuals but to change the system. Simulate competition. Have open, transparent bidding under a firm regulator (like an auction). The regulator evaluates the quantity and quality of coal in a mine, sets a minimum price (to keep out frivolous bidders and cartels) and offers the mine to the highest bidder. This would replace the present corrupt system of leases and licences, of monitoring production at each mine, checking each truck to ensure the operator does not clear 100 trucks and records only 30.

This is a tried and proven system followed in sensible mining countries and it will prevent future Kodas. The petroleum ministry has adopted it in India and it routinely auctions oil and gas fields. The Ambani brothers will not allow us to forget the many contentious issues related to the gas flowing from the Krishna-Godavari basin. But no one has criticized the government for corruption in awarding the gas fields to Mukesh Ambani’s company. The reason? They were won in an open auction.


For the full text in TOI, click here.

This applies equally to our own Bellary.

Muralidhar Rao
 

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murali772's picture

fit case for application of law of eminent domain?

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The verdict of the gram sabhas has been overwhelmingly against mining in the region. Seven of the village councils had by 30 July rejected Vedanta’s proposal to mine bauxite it wanted to use as ore for its alumina refinery. Four more subsequently voted against the project. - - - The local Dongria Kondh and Kutia tribes say their deity Niyam Raja lives in the hills and the proposed mine will impinge upon their socio-cultural and religious rights.

For the full report in the LiveMint, click here

Assuming that, between the state and the licensee, they are prepared to offer an attractive rehabilitation package to the tribals (as also their deity - check here for precedents) to shift out, perhaps the state should consider use of the "law of eminent domain" to acquire the lands. The lands after all contain valuable Bauxite minerals, which the country has great use for.

Muralidhar Rao

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