Most of us must remember the great mining scams done by Sonia Gandhi. We must also remember the Coal Scam where Coal mines were simply allocated at free of cost in a first-cum-first-serve basis to companies close to the “Gandhis”.
Same was the case with Iron ores, where SC had cancelled the allocations of several such mines.
Modi Govt. after coming to power has reformed the mining sector in such a manner that technically it wont be beneficial for any company to do corruption. These reforms are a big amount of work, though these never become prime time news.
Mining sector is primarily governed by below 2 laws.
- Coal Mines (Special Provisions) Act, 2015 [for Coal mines only]
- The Mines and Minerals (Development and Regulation) Amendment Bill, 2021 [for all other mines]
Lets understand what steps the Govt took to reform, reduce corruption and make the sector effective.
- Prior 2015, all mines were just given away at free of cost to people who came first. But after 2015, the laws were amended to enforce electronic auction for sale of mines. This reduced corruption greatly. Why will any company paying during auction bribe politicians for getting a mine?
- In 2015, a new law(Coal Mines (Special Provisions) Act, 2015) was brought afresh repealing all older laws for regulating the coal mining. This law allowed 100% FDI in coal mining sector which was 0% earlier.
- Once the mine is auctioned, as per law, the company has to pay royalty and all money would go to the “state government”. Center wont get a single penny. This will ensure that the money gotten from mines is used for the development of the people.
- Of the royalty received, a certain amount will be deposited in a fund called “District Mineral Development Fund” from which development activities in the district would get carried out. This has resulted to a big reduction in Maoism as money from mining (which has resulted to displacement of people and destruction of jungles, rivers etc.) is now ploughed back to the people.
- In 2016, the laws were further amended allowing sale and purchase of mines, earlier this was not. This enabled the companies, who were not able to mine properly sell of the mines to others who could efficiently harness the mines. This increased availability of minerals, thereby reducing the grip of mining mafia.
- Earlier, the law allowed the mining, production and sale of coal by Coal India Limited(CIL). CIL had absolute monopoly. The CIL never mined the right amount of coal India needed. The big companies imported coal, but many smaller players purchased coal from mafias. The Communists in Bengal were mainly sponsored by the Coal mafia. Even if a company had a coal mine, the company could use the coal for its own purpose not sale in open market. Such mines are called “captive mines” and helped mafias carry their business.
- In 2016, the Coal mining law was amended to allow companies sell the coal in open market there by breaking the monopoly of CIL.
- In 2020 the laws were amended again. The amendment made it very easy for companies to bid mines and transfer regulatory clearances if a transfer of mines occur through sale or otherwise. This broke a big corruption nexus(between corrupt govt officials and mafias) as mafias who operated as lawless body cannot compete once organized companies enter the sector.
- In 2021 the laws were again amended. In this the concept of captive mines (where the end use of a mineral was specified) was removed altogether. The mining market has become free and companies will pay royalty to state govt for the money they earn, and do whatever with minerals they mined.
- The 2021 law also has made it tougher for companies who used to hoard mines.
- The law now makes it easier and cost effective for companies to fund exploration activities.
In nutshell, the effects of the reforms has already started to see.
- Indian steel exports have increased.
- Power production has increased due to easy availability of Coal.
- Many core companies have started coming up.
- Grip of mining mafia has reduced. We can see the political effects – Communists/Gandhis are getting weaker.
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