Safeguard our minerals, our children's inheritance, from theft
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The National Mineral Policy is open till Feb 9, 2018 for public comments. Minerals are a shared inheritance. The present mining system in India is leading to enormous losses of our mineral wealth, and a few cronies are benefiting. What little is received by governments is also spent, a total loss for our children. This must stop. Hence we are sending the representation to the Ministry.
As the draft National Mineral Policy acknowledges, “natural resources, including minerals, are a shared inheritance where the state is the trustee on behalf of the people to ensure that future generations receive the benefit of inheritance.” If we fulfill this duty, we may enjoy the fruits of our inheritance. A loss is a loss to all of us and all our future generations.
In order to reflect these principles meaningfully, the National Mineral Policy must incorporate the following:
1. The objective of the MMDR Act must be to ensure that rights of future generations to our shared inheritance are safeguarded, not just “development and regulation of mines and minerals”.
2. Mineral conservation must be defined to mean conservation of the value of the minerals. Mineral development would include zero waste mining – extract every bit of value including associated minerals, now dumped as waste.
3. Minerals represent opportunities. Mining must be capped to ensure availability of the mining jobs and income from extraction over multiple generations. Mining must also be capped to ensure availability of the mineral over multiple generations. Some part of our minerals must be set aside as strategic reserves. The draft policy discusses a “disaggregated approach … considering aspects like reserves/ resources and potential for reuse through recycling” without mentioning that this would be to establish these two caps and strategic reserves.
4. For the environment, as the policy suggests, we must first establish no-go areas. Then we must impose area-wide limits on extraction under the Precautionary Principle. We must first try to avoid any damage. If damage is inevitable, it must be fully compensated for under the Polluter Pays Principle. These constitutional principles are ignored in the draft Policy.
5. FPIC (“Free Prior Informed Consent”) of the mining affected is necessary before mining. During mining, the District Mineral Foundation must be controlled by the mining affected, and the plans must be developed through participatory planning and budgeting.
6. State Governments, as owners, must do more than “endeavour to ensure that the full value of the extracted minerals is received by the State.” All mining must be on a zero loss basis. We cannot afford to lose any part of our children’s inheritance. This requires the following:
(a) Illegal mining is simply theft from our children and must be punished severely. Offenders must be blacklisted, prevented from handing public resources.
(b) The Government must prove that the terms of any fresh mining prevent a loss. The present auction structures used for the mineral and coal auctions guarantee losses to the people when mineral prices boom. This must stop.
(c) If there are any mines where we are losing any of the value of our children’s inheritance, the Government must pursue all legal avenues to cancel the lease. Ministry of Mines TAMRA data (Jan 25) shows that for 33 leases auctioned so far, the amounts payable towards royalty, DMF and NMET add up to Rs. 29,556 crores, while the auction premia is Rs. 98,832 crores. This indicates massive losses are being suffered on the pre 2015 mining leases.
7. Intergenerational equity is the primary objective of the FRBM Act 2003. For the definition of “revenue deficit” in Section 2(e) of the FRBM Act 2003 (or its proposed replacement), all receipts from minerals should be treated as a capital receipt from the sale of our children’s inheritance.
8. Following the Goa example, all mineral receipts must only be deposited in a Future Generations Fund, with the state as the trustee on behalf of the present and especially future generations. This is already the practice in over 50 countries and sub-national entities. The following steps must be followed to achieve this:
(a) Any receipts from new leases must be deposited into the Future Generations Fund.
(b) All auction premia from mineral auctions should be deposited into this Fund.
(c) At present, royalty is treated as revenue and spent. This must stop within five years.
Any loss is a loss to everyone equally, effectively a per-head tax, highly regressive.
9. The Future Generations Fund should be managed by the National Pension Scheme. The primary investment goal must be to maintain the real value of the corpus in the face of rising prices, and various other threats like corruption, expropriation, etc, and to earn real income. The real income must only be distributed to all the people as a Citizens’ Dividend. Any loss or diversion is effectively a hidden per-head tax, immoral.
10. As minerals are some of our most valuable assets, the state must implement a cutting edge control system. This includes satellite, drone and lidar imaging, system auditors, Aadhaar tracking, fit and proper person tests, a whistleblower and PIL litigants rewards and protection scheme, etc. Mining entities should also be audited frequently.
11. The people, as the real owners of the minerals, should be permitted to satisfy themselves at any time that their children’s inheritance is protected. This requires radical transparency including the ability to conduct social audits, and open access to the public to all data (including the data feeds) in real time at no cost.
12. India must achieve global best practices including membership of EITI and the WAVES partnership, and adopt practices like Open Budgets, Open Fiscal Models, Open Contracts, Open Data, Mandatory Disclosure of payments to governments, Beneficial Ownership Registries, registry of interests for politicians, mineral chain control systems, prevention of tax Base Erosion and Profit Shifting (BEPS), Free Prior Informed Consent (“FPIC”), etc.
13. The Policy must be implemented through changes to the laws, rules and regulations in a time bound manner. Timelines should be set out in the policy.
Boost to the people and our economy
India is trying to maintain a high growth rate. One key constraint is the availability of savings to finance the required investments, especially in infrastructure. If all states save all their mineral receipts instead of consuming them, it will increase the savings rate. The permanent funds would invest in the capital markets, deepening them with a new pool of savings. The investments are intended to earn real income in perpetuity. This makes them ideal for investment in equity or infrastructure, both much needed.
There have been extensive discussions around the feasibility of a Universal Basic Income in India. The benefits of a UBI are many – direct welfare benefits like improved health or education outcomes, equity effects as the same money helps the disadvantaged more, freedom effects as it acts as insurance or for paying off debt, and economic benefits. Economic benefits include increased entrepreneurship in villages due to the regular inflow of cash and lower migration to cities as a result. The Citizen’s Dividend paid from the permanent fund is a Universal Basic Income.
Openness and transparency with government data has been shown the spur economic growth. There are a few reasons. It becomes easier to locate problems. It becomes easier to check corruption. And most importantly of all, new applications can be created on top of the base data sets. Other than the “open dissemination of geoscientific data as a public good”, the government is quite closed, not open. Being closed closes off business opportunities, stifles entrepreneurship.
The five key elements of the Sustainable Development Goals (SDGs) are People, Planet, Prosperity, Peace and Partnership. Implementing the intergenerational equity principle positively impacts all five key elements by lowering extreme poverty, reducing the environmental impact of mining, increasing prosperity, reducing conflict and finding the financing for it.
The ongoing corruption from mining is a huge drag on the economy. World Bank research shows good governance leads to a 300% increase in per capita income in the long term. Most of our large scams have dealt with natural resources. The corruption is leading to political capture and poor governance. It is also behind our civil war and much of our environmental issues. It is a driver of our galloping inequality and our persistent extreme poverty. The principles we are advocating will make a significant dent of corruption, which is sorely needed.
We insist that these principles be included in the new National Mineral Policy. Let us be remembered as the generation that changed the course of history, not the one that destroyed the planet.
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