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-The Economic Times
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Tribal affairs minister Kishore Chandra Deohas reportedly written to the governors of nine states asking them to cancel mining concessions granted in violation of the law. The Forest Rights Act of 2006 mandates the permission of the gram sabha of a tribal community for using their habitat for purposes other than customary use.
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So, if mining leases have been granted without the permission of gram sabhas on tribal land, such leases would be illegal and should be cancelled. But it is far from clear that the right way to go about this is for a minister at the Centre to write to the governors of states. Governors listen to the President of India. And regardless of the disposition of any state functionary, any affected citizen or group can get a court order to stop illegal activity.
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But this is a legalistic solution that does not address development concerns. The sensible course would be to arrange things in such a way that both goals are achieved, of valuable minerals being extracted for economic use and tribal communities benefiting from such extraction, rather than becoming its victims. For this, a sizeable royalty from the mined mineral should accrue to the local community. The proposed amendment to the mining law seeks to allocate 25% of the profits of the mining operation to the local community.
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This scheme has many flaws. Profits can be manipulated by depressing the price of the initial sale of the mineral, typically to a group company, and inflating other costs. What should be done instead is to transfer to the affected tribal community a reasonable share of the value of the extracted minerals, benchmarked against globally-traded prices. And this is entirely doable.
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In the oil and gas industry, the state appropriates close to 80% of the value generated through cesses, profit shares, royalty and taxes. Other minerals offer up a far smaller share of their value, for no valid reason. Why should the miner retain more value than is required to make mining as profitable a venture as any other?
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