Montek opposes Bill for sharing of mining profits

The Mines Ministry expects that a 26 per cent share in net profits of companies will rake in Rs 18,000 crore annually.

Not surprisingly,the industry is completely opposed to the proposal and has been lobbying hard with the government for its dilution. In separate presentations to the Finance Minister,leading chambers CII and FICCI had said upfront compensation to affected persons was the international norm. Profit sharing or giving 26 per cent equity will make the business unviable,both the industry organisations had argued.

The proposal in the MMDR Bill was moved during the tenure of former mines minister B K Handique. Though ministers in the GoM had reservations initially,a broad consensus had been arrived at by the end of the third meeting. With Dinsha Patel as the new Mines Minister,the GoM is expected to meet again soon to give final shape to the Bill.

When contacted,Handique told The Indian Express: “We need to bear in mind that the economic rent from a natural resource is a surplus that arises from the intrinsic qualities of the resource and is not just a product of sweat and capital of the entrepreneur. This clearly distinguishes a natural resource from other economic enterprises.”

Ahluwalia feared that if the proposal was implemented once Parliament approved the Bill,then “there would be no plan discipline on the use of these resources and the funds would be invested without reference to any development plan for the region”.

“More importantly,there is no guarantee that this expenditure will be additional since states can divert resources they would have spent on the district to other areas,” he said.

He argued that in case of long established existing mines,it will be difficult,if not impossible,to determine who was displaced. In case of PSUs such as Coal India Ltd,Steel Authority of India Ltd,NMDC and others having backward integration,he argued,it would amount to “diverting resources from them and also the Centre” for expenditure by district authorities.

Questioning the very logic of a profit-sharing mechanism for any activity,including displacement of people,Ahluwalia said that demands for a similar mechanism could emanate from thermal power projects,hydro projects and railways. “The development impact of such an interpretation and the possible extension of the law to non-mining areas has to be considered,” the Plan panel Deputy Chairman said.